2011 CAFR - Laredo, TX

CITY OF LAREDO, TEXASCOMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE FISCAL YEAR ENDEDSEPTEMBER 30, 2011PREPARED BY:CITY OF LAREDOFINANCIAL SERVICES DEPARTMENTACCOUNTING DIVISION

CITY OF LAREDO, TEXASCOMPREHENSIVE ANNUAL FINANCIAL REPORTFor Fiscal Year EndedSeptember 30, 2011TABLE OF CONTENTSINTRODUCTION SECTIONLetter of Transmittal …..………………………………………………………………….....GFOA Certificate of Achievement………………..………………………………….………Organizational Chart………………………………………………………………………….List of Elected and Appointed Officials……………………………………………………...PageIXXIXIIFINANCIAL SECTIONIndependent Auditor’s Report…………………………………………..…………….... 1Management’s Discussion and Analysis………………………………………………… 3Basic Financial Statements:Government-wide Financial Statements:Statement of Net Assets …...………………………………………………..….......... 17Statement of Activities………………………………………………………..…........ 19Fund Financial Statements:Balance Sheet – Governmental Funds ………………………………………………. 20Statement of Revenues, Expenditures, and Changes inFund Balances – Governmental Funds…………………………………………….. 21Reconciliation of the Statement of Revenues, Expenditures and ChangesIn Fund Balances of Governmental Funds to the Statements of Activities 22Statement of Revenues, Expenditures and Changes inFund Balances – Budget and Actual – General Fund ……………………………… 24Statement of Net Assets – Proprietary Funds………………………………………… 26Statement of Revenues, Expenses, and Changes inFund Net Assets – Proprietary Funds………………………………………………. 28Statement of Cash Flows – Proprietary Funds ………………………………............. 30Statement of Fiduciary Net Assets – Fiduciary Funds……………………………….. 32Statement of Changes in Fiduciary Net Assets – Fiduciary Funds…………………… 33Notes to the Basic Financial Statements..…………………………………………………. 35Debt ServiceSchedule of Revenues, Expenditures, and Changes in 83Fund Balances – Debt Service Funds ………………………………………………...Combining and Individual Fund Statements:Combining Balance Sheet – Nonmajor Governmental Funds: ……………………………… 90Combining Statement of Revenues, Expenditures andChanges in Fund Balances – Nonmajor Governmental Funds …………………………… 98

Schedules of Revenues, Expenditures, and Changes inFund Balances – Budget and Actual:CDBG Special Revenue Fund….………………………………………………………….. 107Housing Rehabilitation…………………………………………………………………….. 108Home Investment Fund ...………………………………………………………………….. 109Emergency Shelter Fund …………………………………………………………………… 110Home Investment Affordable Housing................................................................................. 111Community Development ARRA ………………………………………………………..... 112Auto Theft Task Force…………………………………………………………………….. 113Financial Task Force............................................................................................................. 114Special Police Program ……………………………………………………………………. 115911 Emergency Communications Fund ……………………………………………........... 116Health Fund……………………………………………………………….……………...... 118Special Fire Grants................................................................................................................ 120International Airport …………………………………………………………………….... 122Civic Center ................…………………………………………………………………….. 124Hotel Motel Occupancy Tax……………………………………………………………….. 125Veterans Field ……………………………………………………………………………… 126Public Access Channel.......………………………………………………………………... 127Mercado Management Fund…….………………………………………………………….. 128Laredo Convention and Visitors Bureau ………………………………………………...... 129Recreation Fund...................................................................................................................... 130Parking Meters……………………………………………………………………………… 131Hazardous Materials............................................................................................................. 132Environmental Services …………………………………………………………………… 134Keep Laredo Beautiful, Inc. Fund………………………………………………………...... 136Noise Abatement Lease Program.……………………………………………………......... 137Sport and Community Venue................................................................................................ 138Laredo Energy Arena............................................................................................................. 139Friends of the Library…………………………………………………………………….... 140Police Trust Fund…………………………………………………………………………... 141Webb County Colonias Project.............................................................................................. 142Parks Capital Grants..…………………………………………………………………….... 143Capital Grants....................................................................................................................... 144Contractual Obligations…………………………………………………………………..... 145Certificate of Obligation 2000 Issue.…………………………………………………........ 146Certificate of Obligation 2002 Issue……………………………………………………...... 147Certificate of Obligation 2005 Issue…..………………………………………………........ 148Certificate of Obligation 2006 Issue………………………………………………….......... 149Certificate of Obligation 2007 Issue ……………………………………………………..... 150Certificate of Obligation 2008 Issue ……………………………………………………..... 151Certificate of Obligation 2009 Issue ……………………………………………………..... 152Certificate of Obligation 2010 Issue...................................................................................... 153Baseball Stadium.................................................................................................................... 154Airport Construction Fund ……………………………………………………………….... 155Capital Improvements …………………………………………………………………….... 156Canseco Endowment Fund…...………………………………………………………….... 158

Combining Statement of Net Assets – Internal Service Funds…………….…………….......... 160Combining Statement of Revenues, Expenses andChanges in Fund Net Assets - Internal Service Funds………………………………........... 161Combining Statement of Cash Flows – Internal Service Funds ………………………............. 162Risk Management…………………………………………….…………………………..... 164Health And Benefits………………………………………….…………………………..... 166Fleet Management…………………………………………….………………………….... 168Information Technology …………………………………………………………………... 170Capital Assets Used in the Operation of Governmental Funds:Comparative Schedules By Source. ……………………………………………………....... 173Schedule by Function and Activity….…………………………………………………........ 174Schedule of Changes by Function and Activity……………………………………….......... 176Supplementary Financial Statements-for Enterprise Funds:Combining Statement of Net Assets…………………………………………….…………. ..... 180Combining Statement of Revenues, Expenses, and Changes in Net Assets……....................... 181Combining Statement of Cash Flows………………………………………………………....... 182Municipal Transit System……………………………………………………………....... 184Bridge System…………………………………………………………………………..... 190Municipal Housing Corporation……………………………………………………….... 194Waterworks System……………………………………………….…………………....... 198Sewer System…………………………………………………………………………..... 202Solid Waste Management……………………………………………………………....... 206Supplementary Financial Statements-for Fiduciary Funds:Statement of Net Assets …………………....………………………………………....... 212Statement of Changes in Net Assets.................................................................................. 213Combining Statement of Changes in Assets and Liabilities …………………..….......... 214STATISTICAL SECTION:This part of the City of Laredo’s comprehensive annual financial report presents detailedinformation as a context for understanding what the information in the financial statements,note disclosures, and required supplementary information says about the City of Laredo’soverall financial health.TableName of TableFinancial TrendsThese schedules contain trend information to help the reader understand how thegovernment’s financial performance and well-being have changed over time.1 Net Assets By Component …………………………………………………………..... 2172 Changes in Net Assets ……………………………………………………………....... 2183 Changes in Fund Balance, Governmental Funds ………………………………........... 2204 Fund Balance, Governmental Funds …………………………………………….......... 2215 General Governmental Tax Revenues by Source ……………………………….......... 222

Revenue CapacityThese schedules contain trend information to help the reader assess the government’smost significant local revenue source, the property tax.6 Property Tax Levies and Collections ..……………………………………………....... 2237 Assessed and Estimated Actual Value of Taxable Property .………………................. 2248 Property Tax Rates – Direct and Overlapping Governments…….……………............. 2259 Special Assessments Billing and Collections .………………………………................ 22610 Principal Taxpayers ……………………………...………………………………........ 227Debt CapacityThese schedules contain trend information to help the reader assess the affordabilityof the government’s current levels of outstanding debt and the government’s abilityto issue additional debt in the future .11 Computation of Legal Debt Margin …...…………………………………….……...... 22812 Ratio of Net General Bonded Debt to Assessed Value and Net BondedDebt per Capita .………….………………………………………………………........ 22913 Ratio of Annual Debt Service Expenditures for General Bonded Debt toTotal General Government Expenditures ….…….……………………………........... 23014 Computation of Direct and Overlapping Debt ...………………………………........... 23115 Revenue Bond Coverage – Bridge, Water, Sewer System, and SportsVenue ……………………………...………………………………………………...... 23216 Ratios of Outstanding Debt by Type ……………………………………………......... 234Demographic and Economic InformationThese schedules offer demographic and economic indicators to help the readerunderstand the environment within which the government’s financial activities takeplace.17 Demographics Statistics …………..…...…………………………………….……...... 23518 Property Value, Construciton and Bank Deposits ……………………………............ 23819 Principal Employers ……………………….….…….……………………………....... 23920 Principal Water Consumers …………………....……………………………….......... 240Debt CapacityThese schedules contain trend information to help the reader assess the affordabilityof the government’s current levels of outstanding debt and the government’s abilityto issue additional debt in the future .21 Miscellaneous Statistics …………..…...…………………………………….……....... 24122 Insurance in Force ……….………………………………………………………........ 25323 Full-Time Equivalent City Government Employees by Function ……………............. 25424 Operating Indicators by Function ……………...………………………………........... 25525 Capital Assets by Function………………………………………………………......... 256

CONTINUING DISCLOSURE INFORMATION ……………………………………….......... 257SINGLE AUDIT. ………………………………………………………………………………. 299

February 17, 2012To the Honorable Mayor, Members of the Governing Council, and Citizens of theCity of Laredo.We are pleased to submit the Comprehensive Annual Financial Report of the Cityof Laredo, Texas for the fiscal year ending September 30, 2011. Responsibility forboth the accuracy of the data and the completeness and fairness of thepresentation, including all disclosures, rests with the City. To the best of ourknowledge and belief, the enclosed data is accurate in all material aspects and isreported in a manner designed to present fairly the financial position and results ofoperations of the various funds of the City. All disclosures necessary to enable thereader to gain an understanding of the City's financial activities have beenincluded.This report consists of management’s representations concerning the finances ofthe City of Laredo. Consequently, management assumes full responsibility for thecompleteness and reliability of all of the information presented in this report. Toprovide a reasonable basis for making these representations, management of theCity of Laredo has established a comprehensive internal control framework that isdesigned both to protect the government’s assets from loss, theft, or misuse andto compile sufficient reliable information for the preparation of the City of Laredo’sfinancial statements in conformity with GAAP. Because the cost of internalcontrols should not outweigh their benefits, the City of Laredo’s comprehensiveframework of internal controls has been designed to provide reasonable ratherthan absolute assurance that the financial statements will be free from materialmisstatement. As management, we assert that, to the best of our knowledge andbelief, this financial report is complete and reliable in all material respects.The City of Laredo’s financial statements have been audited by Canales, Garza, &Baum Co., P.L.L.C., a firm of licensed certified public accountants. The goal of theindependent audit was to provide reasonable assurance that the financialstatements of the City of Laredo for the fiscal year ended September 30, 2011, arefree of material misstatement. The independent audit involved examining, on atest basis, evidence supporting the amounts and disclosures in the financialI

statements, assessing the accounting principles used and significant estimatesmade by management; and evaluating the overall financial statement presentation.The independent auditors concluded, based upon the audit, that there was areasonable basis for rendering an unqualified opinion that the City of Laredo’sfinancial statements for the fiscal year ended September 30, 2011 are fairlypresented in conformity with GAAP. The independent auditor’s report is presentedas the first component of the financial section of this report.In addition, the City has an Internal Auditor’s Division. The division is under theCity Manager but reports directly to the Mayor and City Council. Its primaryresponsibility is to measure and evaluate the City’s accounting and operationalcontrols. This division was directly established to ensure that the City’s assets aresafeguarded and can provide reasonable assurance of proper accounting andoperational activities to our public.The independent audit of the financial statements of the City of Laredo was part ofa broader, federally mandated “Single Audit” designed to meet the special needsof federal and state grantor agencies. The standards governing Single Auditengagements require the independent auditor to report not only on the fairpresentation of the financial statements, but also on the audited government’sinternal controls and compliance with legal requirements, with special emphasis oninternal controls and legal requirements involving the administration of federalawards. These reports are available in the Single Audit Section of this report.GAAP requires that management provide a narrative introduction, overview, andanalysis to accompany the basic financial statements in the form of Management’sDiscussion and Analysis (MD&A). This letter of transmittal is designed tocomplement MD&A and should be read in conjunction with it. The City of Laredo’sMD&A can be found immediately following the report of the independent auditors.Profile of the GovernmentThe City of Laredo incorporated in 1755. It is located on the north bank of thehistorical Rio Grande River. Laredo is unique because it is the only City to operateinternational bridges between two Mexican states. The City presently maintainsfour border crossings, three with Nuevo Laredo, Mexico and one with Colombia,Mexico. Laredo is at the center of the primary trade route. It is the only border citystrategically positioned at the convergence of all land transportation systemsbetween Canada, the United States and Mexico. The City of Laredo is the largestcity in the County of Webb; it is the tenth most populated City in the State of Texasaccording with a population of 233,152 in 2010 according to the U.S. Census.The City of Laredo is empowered to levy a property tax on both real and personalproperties located within its boundaries. It also is empowered by state statue toextend its corporate limits by annexation, which occurs periodically when deemedappropriate by the City Council.II

The City of Laredo has operated under the council-manager form of government.The policy-making and legislative authority are vested to the City Councilconsisting of the Mayor and eight Council members. The governing council isresponsible, among other things for passing ordinances, adopting budgets,appointing committees, and the hiring of the City Manager. The City Manager isresponsible for carrying out the policies and ordinances of the City Council, foroverseeing the day-to-day operations of the government, and for appointing thedirectors of the various departments. The council is elected on a non-partisanbasis. Council members may serve up to two (2) four (4) year terms. The mayoris elected to serve a four-year term with a limit of two (2) terms. All councilmembers are elected by district. The mayor is elected at large.The City of Laredo provides a full range of municipal services including police andfire protection, parks, recreational and cultural activities, libraries, recyclingservices, a civic center, public health and social services, municipal housing,public improvements, public bus transportation, water and wastewater services,sanitation services, four international bridges, an international airport, planning andzoning, and general administrative services. As such, these activities are reflectedin the financial statements along with the capital project funds, debt service fund,internal service funds, and fiduciary funds. These financial statements wereprepared in accordance with generally accepted accounting principles for localgovernments as prescribed by the Government Accounting Standards Boards(GASB).The financial statements include component units of the City of Laredo.Component units are units are legally separate organizations for which our electedofficials are financially accountable. The City’s component unit entities include:• Laredo Municipal Housing Authority Corporation• Laredo Transit Management, Inc.• Laredo Convention and Visitor’s Bureau• Laredo Fire Fighters’ Retirement System• Laredo Public Facilities Corporation - La Terraza, LLCAll these entities can be explained more in detail on note #1 of the Notes to theBasic Financial Statements portion of the CAFR.The annual budget serves as the foundation for the City of Laredo’s financialplanning and control. The City Manager presents a proposed balanced budget tothe City Council for review though council workshops. The council is required tohold public hearings on the proposed budget and to adopt a final budget by nolater than September 30 th , the close of the City of Laredo’s fiscal year. Theappropriated budget is prepared by fund, function (e.g., public safety), anddepartment (e.g. police). Department Directors may make transfers ofappropriations within a department through an insufficient appropriation notice thatIII

is reviewed by the Budget, Finance and City Manager’s Office depending on thedollar value. Transfers of appropriations between funds require the specialapproval of the City Council. Budget-to-actual comparisons are provided in thisreport for each individual governmental fund for which an appropriated annualbudget has been adopted. For the general fund, this comparison is presented aspart of the basic financial statements for the governmental funds.For governmental funds, other than the general fund, with appropriated annualbudgets, this comparison is presented in the governmental fund subsection of thisreport. Also included in the governmental fund subsection are project-lengthbudget-to-actual comparisons for each governmental fund for which a projectlengthbudget has been adopted (i.e., the special revenue fund and the capitalprojects fund).Factors Affecting Financial ConditionThe information presented in the financial statements is perhaps best understoodwhen it is considered from the broader perspective of the specific environmentwithin which the City of Laredo operates.Local economy: Though the nation’s economy is struggling with sales,mortgages, and unemployment, the City of Laredo has been very fortunate to nothave received the full impact. Laredo is strategically positioned with a largetransportation and warehousing industry where we meet the basic needs ofconsumers. Trade between the United States and México is a vital part of oureconomy and continues to prosper. The Port of Laredo is the #1 inland Port onthe U.S. – México border. With our 4 international bridges, Laredo crosses over$173 billion imports and exports annually. It is the 6 th largest U.S. CustomsDistrict in the country. The Laredo International Airport is the 8 th largest cargo hubto South America. In 2010, the Airport serviced over 425 million pounds of cargoas compared to prior year.The City of Laredo continues to undertake an aggressive marketing approach inbringing additional commerce to our City. We continue to visit as well has hostproducers of goods from Central and South America to our City in order toestablish stronger economic growth. We have established healthy businessopportunities where Laredo will be a route through the Ports of Lazaro Cardenasand Manzanillo to logistically import products into the United States. Two greatcatalysts that will enhance the City’s economic growth in international trade are thefollowing:• The City has built two cold storage facilities which will draw exports to ourGateway City. Exporters of fresh fruits, vegetables and flowers will crossour border more expediently while keeping its products safe from theexternal elements. The countries of Chile and Ecuador have signed formalIV

agreements with Mexican officials and the City of Laredo for this venue.• Current plans are underway to construct a $2.3 million facility located at ourInternational Airport for federal inspections. This will allow MexicanCustoms to pre-clear American goods for import into Mexico. This will bethe first international inspection in the United States.Another major economic catalyst that is boosting our economy tremendously is theactivity of oil and gas in our area. The drilling and exploration in the Eagle FordShale, has heightened the City’s sales tax and hotel/motel revenues to new levels.Due to the close proximity to our City, the oil and gas industry increased otherservice sectors in our community such as rental properties, restaurants, and nonessential purchases. This activity has created job employment opportunities to ourcitizens where it is expected to create over 36,000 new jobs.Locally, investors continue to be very interested in Laredo and its market,especially in retail. Laredo continues to be the home of Wal-Mart’s #1 sales storein the nation. Grocery store chains such as H.E.B. continue to invest in Laredo byadding additional stores. Hobby Lobby, additional electronic stores such as BestBuy and sporting goods stores such as Academy continue to be top nationwideretail sellers in Laredo. Our 1.2 million square foot mall holds over 150 storeswhich amongst them are many restaurants such as Luby’s, Olive Garden, RedLobster, Tony Romas, etc. It also has stores such as Dillard’s Bells, Macy’s, JCPenny, Sears, BeBe, Guess, Hollister, American Eagle, Aeropostale, ChuckyCheese, and many more.In addition to these stores, we have added a new flavor to Laredo. Over 40 blocksof Mexican import vendors have set up shop in a strip of Laredo called “SanBernardo Avenue”. This street is dedicated to promoting Laredo as the shoppingattraction for everything unique to México and its products with artistry and crafts.This has become a very popular destination for tourists and locals.A visit must be taken to the Laredo Energy Arena; a City owned facility that isoperated by SMG is the home of the 2-time Central Hockey League Champions,the “Laredo Bucks”. This beautiful facility hosts many family oriented events whichinclude indoor football, exhibition basketball games, Rodeos, motor cross racing,wrestling, and major concert performers.MAJOR INITIATIVESFor the Year 2010-2011The City staff, following the directives of the City Council and the City Manager,have addressed and completed a large number of projects during the year. TheV

projects are reviewed and adopted annually through a five year CapitalImprovement Plan. These projects reflect the City’s commitment to building abetter Laredo and provide its citizen with a better quality of life, economicprosperity and safety.• Completed a 3 MGD water tower that will server over 10,000 residents inCentral Laredo. This tank will alleviate the pressure on antiquated water lines.The project cost was $3.6 million.• A commercial booth expansion project at the World Trade Bridge wascompleted with the project cost of $4.62 million. The project includes theaddition of 7 new lanes and primary inspection booths, 2 additional secondarylanes, and other site enhancements of which all will aid to improve the flow ofcommercial trucks for our Port.• Completion of two cold storage inspection facilities with a project cost of $1.7million located at the World Trade Bridge and the Colombia Solidarity Bridge.These facilities will be useful in transporting perishable produce from Centraland South America into the United States. Each refrigerated facility isapproximately 6,000 square feet. The facilities will be operated through aprivate/public partnership.• Rehabilitation of 462 City blocks with a project cost of $3.7 million.Future Major InitiativesProjects that have been initiated or will be undertaken during the next fiscal yearinclude:• Construction of the Jefferson Water Treatment Plant continues where the$35.1 million project will have new back-up generators, a new electricalsystem, and will be able to pump 45 million gallons per day. The project will befunded by the Texas Water Development Board.• Construction of a Water Treatment Plant called “El Pico Water TreatmentPlant” began November 2011. This project will eventually have capacity of 80million gallons per day and its cost is $100 million.• Another project designed to help impact trade is that of a federal inspectionwith a project cost of $2.3 million. The Laredo International Airport will allowMexican customs to pre-clear American goods for import into Mexico.VI

• The Max A. Mandel Municipal Golf Course is the first municipal golf course inLaredo. The course is to be situated along the Rio Grande River. WaterRights, 240 acres of land, and $1 million were donated by the Mandel Familytoward this project. The total construction cost of the golf course is estimatedat $7.8 million. The course was designed by Robert Trent Jones, one of thetop leading design firms in the world. The 18 hole golf course will include a3,600 square foot clubhouse, a pro shop, a restaurant, a park and many otherfeatures. The project is expected to be completed in the fall of 2012.• A baseball stadium at a cost of $21 million will be constructed off Loop 20,between the Laredo International Airport and the Laredo Energy Arena. Thebaseball park will hold 6,000 spectators where among some amenities willinclude picnic areas, luxury suites and a full service bar. The projected isexpected to be completed by May 2012.• The construction of a 3 rd library for the citizens of Laredo is pending completiondue to contractor delays. The cost of this project is $4.6 million. The library islocated in South Laredo with approximately 22,000 square feet to include anexpanded collection for circulation, a Teen Café, children’s area, reference andcomputer labs, Wi-Fi and individual study rooms.• Construction of a $4.8 million contract for a Hazardous Material ContainmentSystem Retrofit Project which will be built in Bridge #4 - the World TradeInternational Bridge. This project will construct a hazardous materialcontainment system integral into the World Trade International Bridge span,which will capture and contain any hazardous material that maybe spilled onthe international bridge. Estimated time of completion is in the later part of2012 due to pending approvals from the Department of State.• The City began construction of the Fire Department Administration Building.The building will house over 55 administrative personnel along with fireinspectors and the EMS training division. The project cost of this building is $8million. The Project is expected to be completed April 2012.• Various recreational and park projects were funded during the current year withthe sale of a Certificate of Obligation Bonds. The projects include thefollowing:o Construction continues for a recreational facility in East Laredo; HayesRecreation Center, a 35,000 square feet facility, with estimated cost of$13 million will include a lobby/reception area, elevated indoor tack,game room, computer lab, rock wall, kitchen/juice bar, basketballgym/indoor soccer field, cardiovascular area, dance/aerobics room anda multipurpose room. The project is expected to be completed in March2012.VII

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Mayor and City CouncilCity SecretaryCity Manager's OfficeMunicipal CourtCity AttorneyAdministrationNeighborhoodOperationsFinancial ServicesFireParks and Leisure ServicesTaxConvention & Visitor’sBureauEngineeringHuman ResourcesCommunity DevelopmentEnvironmental ServicesInformation Services andTelecommunicationsEconomic DevelopmentUtilitiesPlanning and ZoningHealthTransportationBuilding DevelopmentServicesPolice

CITY OF LAREDO, TEXASADMINISTRATIVE OFFICIALSCITY COUNCILRaul G. Salinas, MayorCOUNCIL MEMBER DISTRICT COUNCIL MEMBER DISTRICTMike Garza I Johnny RendonMayor Pro-TemporeVEsteban Rangel II Charlie San Miguel VIAlejandro “Alex”Perez, Jr.III Jorge A. Vera VIIJuan Narvaez IV Cindy Liendo-Espinoza VIIICITY STAFFCarlos R. Villarreal, City ManagerCynthia Collazo, Deputy ManagerHoracio De Leon, Assistant City ManagerJesus M. Olivares, Assistant City ManagerRaul Casso, City AttorneyRosario Camarillo-Cabello, Financial Services Director

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FINANCIAL SECTION

MANAGEMENT’S DISCUSSION AND ANALYSISThe City of Laredo’s Management’s Discussion and Analysis is designed to (a) assist the reader in focusing onsignificant financial issues, (b) provide an overview of the City’s financial activity, (c) identify changes in theCity’s financial position (its ability to address the next and subsequent years’ challenges), (d) identify anymaterial deviations from the financial plan (the approved budget), and (e) identify individual fund issues orconcerns.This section of the City of Laredo’s annual financial report presents our discussion and analysis of the City’sfinancial performance during the fiscal year that ended September 30, 2011. We encourage readers toconsider the information presented here in conjunction with additional information that we have furnished inour letter of transmittal.FINANCIAL HIGHLIGHTS• On a government-wide basis, the Primary Government total assets exceeded its liabilities as ofSeptember 30, 2011 by $799.1 million. There was a $71.3 million in unrestricted net assets.• The Primary Government’s total net assets increased by $63.6 million as compared to prior year.Net Assets increased for governmental activities by $24.8 million while business type activitiesincreased by $38.7 from prior year. The primary government’s total expenses were $376.9million; this is less than the $301.5 million generated in charges for services, grants, taxes andother revenues.• The cost of the Primary Government’s governmental activities was $236 million for the 2011fiscal year.• As of September 30, 2011, the City’s governmental fund reported combined ending fund balancesof $158.2; a decrease of $11.2 million compared to prior year activities. Approximately 7% of thecombined fund balances or $10.6 million is unassigned and available for the discretional use ofwhich the funds are collected.• The unassigned fund balance in General Fund was $10.7 million or 7.6 % of total General Fundcurrent year expenditures.• In fiscal year 2011, the City issued $23.9 million in debt to finance capital projects. There was adecrease of $ 10.4 million in long-term liabilities from the prior year.OVERVIEW OF THE FINANCIAL STATEMENTSThis annual report consists of four parts-management’s discussion and analysis (this section), the basicfinancial statements, required supplemental information, and an option section that presents combiningstatements for non-major Governmental funds and internal service funds. The basic financial statementsinclude two kinds of statements that present different views of the City.‣ The first two statements are Government-wide financial statements that provide both long-term andshort-term information about the City’s overall financial status.‣ The remaining statements are fund financial statements that focus on individual parts of the CityGovernment, reporting the City’s operations in more detail than the Governmental-wide statements.‣ The Governmental funds statements tell how General Government services like public safety werefinanced in the short term as well as what remains for future spending.‣ Proprietary fund statements offer short-and long-term financial information about the activities theGovernment operates like a business, such as the Bridge, Transit and Water and Sewer funds.‣ Fiduciary fund statements provide information about the financial relationships as an example, theretirement plan for the City’s employees in which the City acts solely as a trustee or agent for thebenefit of others, to whom the resources above belong.3

FUND FINANCIAL STATEMENTSGovernment –Wide StatementsGovernmentalFundsProprietary FundsFiduciary FundsScope • Statement ofnet assets• Statement ofactivities• Balance sheet• Statement ofRevenues andExpenditures,and changes infund balances• Statement ofnet assets• Statement ofRevenuesexpenses, andchanges in netassets• Statement ofCash Flows• Statement offiduciary netassets• Statement ofchanges infiduciary netassetsAccounting basis andmeasurement focusAccrual accountingand economicresources focusModified accrualaccounting andcurrent financialresources focusAccrual accountingand economicresources focusAccrual accountingand economicresources focusType of asset/liabilityinformationAll assets andliabilities, bothfinancial andcapital, and shorttermand long-termOnly assetsexpected to be usedup and liabilitiesthat come dueduring the year orsoon thereafter; nocapital assetsincludedAll assets andliabilities, bothfinancial and capitaland short-term andlong-termAll assets andliabilities, bothshort-term and longtermthe City’sfunds do notcurrently containcapital assets,although they can.Type of inflow/outflowinformationAll revenues andexpenses during theyear, regardless ofwhen cash isreceived or paid.Revenues for whichcash is receivedduring or soon afterthe year;expenditures whengoods and serviceshave been receivedand payment is dueduring the year orsoon thereafterAll revenues andexpenses during theyear; regardless ofwhen cash isreceived or paidAll revenues andexpenses during theyear, regardlesswhen cash isreceived or paidThe financial statements also include notes that explain some of the information in the financial statements andprovide more detailed data. The statements are followed by a section of required supplementary informationthat further explains and supports the information in the financial statements. Figure A-1 shows how therequired parts of this annual report are arranged and relate to one another. In addition these required elements,we have included a section with combining statements that provide details about our non-major GovernmentalFunds and Internal Service Funds, each of which are added together and presented in single columns in thebasic financial statements.Figure A-1Required Components of theCity of Laredo’s Basic Financial Report4

Management's Basic RequiredDiscussion Financial SupplementalAnd Statements InformationAnalysisGovernment- Fund NotesWide Financial To theFinancial Summaries FinancialStatementsStatementsSummaryDetailFigure A-2 summarizes the major features of the City’s financial statements, including the portion of the Citygovernment they cover and the types of information they contain. The remainder of this overview section ofmanagement’s discussion and analysis explains the structure and contents of each of the financial statements.Government-wide StatementsThe Government-wide statements are designed to provide readers with a broad overview of the City ofLaredo’s finances, in a manner similar to a private-sector business.The Statement of Net Assets presents information on all of the City’s assets and liabilities, with the differencebetween the two reported as net assets. Overtime, increases and decreases in net assets may serve as a usefulindicator of the City’s financial health or position.• Increases or decreases in the City’s net assets are indicators of whether its financial health isimproving or deteriorating, respectively.• To assess the overall health of the City consideration to non-financial factors such as changes in theCity’s property tax base and the condition of the City’s roads.The Government-wide financial statements of the City are divided into three activities:• Government activities- Most of the City’s basic services are included here, such as the police, fire,parks, public works, health, library departments, and general administration. Sales taxes and propertytaxes, charges for services, and the state and federal grants finance most of these activities.• Business-type activities – The City charges fees to customers to help it cover its cost of certainservices it provides. The City’s Municipal Court operations and a portion of the Bridge revenues areincluded here.• Blended Component units – The City includes six other entities in its report. These entities are:Laredo Municipal Housing Corp., Laredo Municipal Transit System, Laredo Convention and Visitors’Bureau, Laredo Firefighters’ Retirement System, Laredo Public Facilities Corporation-La Terraza,5

LLC, and the Laredo Energy Arena. Although legally separate, these “component units” are importantbecause the City is financially accountable for them.Fund Financial StatementsThe fund financial statements provide more detailed information about the City’s most significant funds – notthe City as a whole. Funds are grouping or related accounts that the City uses to keep track of the specificsources of funding and spending for particular purposes.• Some funds are required by State law and by bond covenants.• The City Council has established other funds to account for particular purposes or projects and or toshow that it is properly using certain revenue sources.The City has three kinds of funds:• Governmental funds – Most of the City’s basic services are included in Governmental funds, whichfocus on (1) how cash and other financial assets that can readily be converted to cash flow in and outand (2) the balances left at year-end that are available for spending. Consequently, the Governmentalfunds statements provide a detailed short-term view that helps you determine whether there are moreor fewer financial resources that can be spent in the near future to finance the City’s programs.Because this information does not encompass the additional long-term focus of the Government-wideStatements, we provide additional information at the bottom of the Governmental Funds Statements, oron the subsequent page, that explains the relationship (or differences) between them.• Proprietary funds – Services for which the City charges customers a fee are generally reported inproprietary funds. Proprietary funds, like the Government-wide Statements, provide both long- andshort-term financial information. These funds are generally used to account for services for which theCity charges customers either outside customers or internal cost centers of the City.o Enterprise funds are used to report the same functions presented as business-type activities inthe government-wide financial statements. The City uses enterprise funds to account for itsMunicipal Transit System, Bridge System, Municipal Housing, Waterworks, Sewer, and SolidWaste Funds.o Internal service funds are an accounting devise used to accumulate and allocate costs internallyamong the City’s various functions. The City uses its internal service funds to account for itsRisk Management, Health & Benefits, Fleet and Information Technology Funds.• Fiduciary funds – The City is the trustee, or fiduciary, for its employee’s pension plans. It is alsoresponsible for other assets that – because of a trust arrangement can be used only for the trustbeneficiaries. The City is responsible for ensuring that the assets reported in these funds are used fortheir intended purposes. All of the City’s fiduciary activities are reported in a separate statement offiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activitiesfrom the City’s Government-wide financial statements because the City cannot use these assets tofinance operations.Notes to the Financial Statements - The Notes provide additional information that is essential to a fullunderstanding of the data provided in the Government-wide and fund financial statements. The notes tothe financial statements follow the basic financial statements.6

Required Supplemental Information – In addition to the basic financial statements and accompanyingnotes, the CAFR also presents certain required supplemental information. These schedules include abudgetary comparison and information concerning the City’s funding of its pension obligations and otherpostemployment benefits.Other Information – Following the required supplemental information are additional schedules such asthe combining statements referred to above in connection with non-major governmental funds, internalservice funds and fiduciary funds and schedules of expenditures for capital projects.GOVERNMENT-WIDE FINANCIAL ANALYSISNet Assets. The City’s combined net assets totaled $799.1 million as of September 30, 2011. Analyzing thenet assets and net expenses of the governmental and business-type activities separately, the business typeactivities net assets are $343.7 million and the government type activities are $455.4 million. This analysisfocuses on the net assets (Table A-1) and changes in general revenues (Table A-2) and significant expenses ofthe City’s governmental and business-type activities.The largest portion of the City’s net assets reflects its investment in capital assets (e.g., land, building,equipment, improvements, construction in progress and infrastructure), less any debt used to acquire thoseassets that is still outstanding. The City uses these capital assets to provide service to citizens; consequentlythese assets are not available for future spending. Although the City’s investment in capital assets is reportednet of related debt, it should be noted that the resources needed to repay this debt must be provided from othersources, since the capital assets themselves cannot be used to liquidate these liabilities.Table A-1City of Laredo’s Net AssetsSeptember 30, 2011 and 2010GovernmentalBusiness-TypeActivities Activities Total2011 2010 2011 2010 2011 2010Current and other assets $ 218,591,259 $ 225,848,059 $ 246,605,303 $ 184,775,286 $ 465,196,562 $ 410,623,345Capital assets 573,867,035 513,872,337 465,505,124 428,607,886 1,039,372,159 942,480,223Unamortized Bond Costs 4,617,550 4,436,239 4,081,902 3,333,943 8,699,452 7,770,182Total assets 797,075,844 744,156,635 716,192,329 616,717,115 1,513,268,173 1,360,873,750Current liabilities 42,564,674 36,707,797 38,126,375 39,570,677 80,691,049 76,278,474Non-current liabilities 299,098,678 276,858,075 334,345,651 272,167,887 633,444,329 549,025,962Total liabilities 341,663,352 313,565,872 372,472,026 311,738,564 714,135,378 625,304,436Net Assets:Invested in capital assets,net of related debt 404,332,329 371,030,290 273,496,354 251,995,464 677,828,683 623,025,754Restricted 24,098,965 23,051,240 25,879,932 16,695,175 49,978,897 39,746,415Unrestricted 26,981,198 36,509,233 44,344,017 36,287,912 71,325,215 72,797,145Total net assets $ 455,412,492 $ 430,590,763 $ 343,720,303 $ 304,978,551 $ 799,132,795 $ 735,569,314A portion of the City’s net assets, $49.98 million represents resources that are subject to external restrictionson how they may be used. The City of Laredo has sufficient funds to meet requirements for cash outlays inthe next fiscal year and has the financial capacity to meet its long-term obligations in the years to come. The7

City’s policy has been to make reasonable and continuous efforts to fund all long-term liabilities. The City’srestricted net assets increased by 25.7% over the prior year.Generally, all net assets generated by governmental actives are either externally restricted or invested incapital assets. Unrestricted governmental activities net assets are $26.98 million for the year.Unrestricted net assets in the business- type activities are $44.34 million, increasing by $8.1 million from prioryear.The table below provides a summary of the City’s operations for the year ended September 30, 2011.Governmental activities increased the City’s net assets by $24.8 million, while Business-Type activitiesincreased by $38.7 million, overall the City’s Net Assets increased by $63.5 million. Total revenues realizedfor the City increased by $30.5 million over the previous year. (See Table A-2). The largest revenue categorywas charges for services, which are comprised for the most part of administrative fees from all departments,bridge tolls and utility charges.Total operating cost of all programs increased by $19.6 million from prior year to $376.9 million. The mostsignificant governmental expense for the City was in providing public safety, cultural and recreational, and airtransportation as compared to prior year. These expenses were offset by revenues collected by a variety ofsources such as property taxes and fines and forfeitures. The most significant portion of the police activity isthe cost of personnel, which is approximately $48.4 million and the fire department with $35.6 million (bothareas including benefits and overtime expenditures).Table A-2City of Laredo’s Changes in Net AssetsSeptember 30, 2011 and 2010GovernmentalBusiness-TypeActivities Activities Total2011 2010 2011 2010 2011 2010Revenues:Program revenues:Charges for services $ 73,120,474 $ 73,280,328 $ 132,488,632 $ 120,119,380 $ 205,609,106 $ 193,399,708Operating grants and -contributions 23,499,860 21,833,031 4,279,722 5,439,854 27,779,582 27,272,885Capital grants andcontributions 36,020,500 48,006,390 36,609,025 26,282,072 72,629,525 74,288,462General revenues:Sales tax 39,050,113 29,790,610 6,311,745 5,512,908 45,361,858 35,303,518Property taxes 69,142,902 69,155,582 - - 69,142,902 69,155,582Other taxes 11,466,079 10,078,239 - - 11,466,079 10,078,239Other 2,662,326 740,113 5,796,304 (245,475) 8,458,630 494,638Total revenue $ 254,962,254 $ 252,884,293 $ 185,485,428 $ 157,108,739 $ 440,447,682 $ 409,993,0328

Graph 1GovernmentalBusiness-TypeActivities Activities Total2011 2010 2011 2010 2011 2010Expenses:General Government $ 33,212,469 $ 33,057,032 $ - $ - $ 33,212,469 $ 33,057,032Public Safety 108,220,849 96,731,529 - - 108,220,849 96,731,529Public Works 28,971,676 31,945,598 - - 28,971,676 31,945,598Health & Welfare 21,559,624 21,408,808 - - 21,559,624 21,408,808Culture & Recreation 24,351,217 21,989,636 - - 24,351,217 21,989,636Air Transportation 8,337,337 5,592,799 - - 8,337,337 5,592,799Interest & Other long - - -term debt 11,330,317 11,170,771 - - 11,330,317 11,170,771Transit System - - 15,011,164 15,264,944 15,011,164 15,264,944Bridge System - - 41,558,090 40,917,048 41,558,090 40,917,048Solid Waste - - 15,794,014 14,516,888 15,794,014 14,516,888Water System - - 42,840,185 40,110,255 42,840,185 40,110,255Sewer System - - 24,269,283 25,526,830 24,269,283 25,526,830Municipal Housing - - 1,427,976 2,013,781 1,427,976 2,013,781Total expenses 235,983,489 221,896,173 140,900,712 138,349,746 376,884,201 360,245,919Inc (dec) in net assetsbefore transfers 18,978,765 30,988,120 44,584,716 18,758,993 63,563,481 49,747,113Transfers 5,842,964 4,683,701 (5,842,964) (4,683,701) - -Incr (Dec) in net assets 24,821,729 35,671,821 38,741,752 14,075,292 63,563,481 49,747,113Net assets, beginning 430,590,763 388,203,399 304,978,551 297,468,259 735,569,314 685,671,658Prior Period Adj. - 6,715,543 - (6,565,000) - 150,543Net assets, ending $ 455,412,492 $ 430,590,763 $ 343,720,303 $ 304,978,551 $ 799,132,795 $ 735,569,3149

Graph 1 represents the cost of each of the City’s 7 largest programs as well as each of the programs revenue.Net cost (total cost less fees generated by the activities and intergovernmental aid) is also reflected for eachprogram. The net cost is the financial burden that was placed on the City’s taxpayers by each of thesefunctions.• The cost of all Governmental activities this year was $236 million.• The amount that our citizens paid for these activities through City taxes and revenues such as interestearnings, franchise fees, and unrestricted grants was $128.2 million.• 45.9% of all Governmental activities expenses were from Public Safety, 12.3% were from PublicWorks, 9% were from Health & Welfare, 10.3% were from Cultural & Recreational, 14.2% were forgeneral governmental activities and 8.3% were from “Other” categories. (See Graph 3).• General Government (support services) comprised approximately 14.2% of the total expenses in fiscalyear 2011; a very stable expenditure line item with an increase of only $155 thousand from prior year.• Expenses for Public Safety represent 45.9% of total expenditures with an increase of 11.9% or $11.5million from prior year. A portion of the increase was due to increased contractual obligations withthe Fire and Police Unions where a 4% cost of living increase was given to Police totaling $1.5 millionand 3.25% to the Fire Department totaling $1 million. In addition, there was a significant adjustmentfor uncompensated absences of $9.6 million of which $3.1 million was unused leave by the PoliceDepartment.• Public Works expenses represent 12.3% of total expenditures with a decrease of $3 million or 9.3% ascompared to the prior year. The decrease in this area is due to a reduction of charges and activity forthe Colonias Projects in Webb County as it relates to heavy construction.• Cultural & Recreational increased by $2.4 million or 10.7% as compared to prior year. This is due toincreased funding for parks projects by Community Development Block Grants of $1.5 million andother smaller increases in Friends of the Library Fund of $500 thousand.• Air Transportation I.e. the International Airport increased by $2.7 million or 49.07% as compared toprior year. The increase of $2.5 million is due to depreciation expenses of its assets.• Business Type Activities transferred to Governmental Activities $5.8 million, an increase of $1.2million from the prior year.• Overall, there was an increase in net assets of $13.8 million for the City. There was a $24.6 millionincrease in the business type activities and a decrease of $10.9 million in the governmental activitiesgenerating the $24.6 million.• 29% of all Governmental Activities revenue came from charges for services, 27% from property taxesand 16% from sales taxes (see Graph 2).Graph 210

Graph 3Business-type ActivitiesRevenues of the City’s business-type activities were $185.5 million for the fiscal year ending September 30,2011, an increase of $28.4 million from prior year. The increase was for various reasons including an increasein capital grants and contributions in the amount of $10.3 million and $12.4 million in charges for services.Other major revenue categories remained at the same level as in the prior year.Expenses for the City’s business-type activities were $140.9 million for the year, a difference of $2.6 millionfrom the prior fiscal year. (Refer to Table A-2). The areas where these increases and decreases occurred areas follows:• $2.7 million increase in Water System for non-operating expenses such as interest of $2.7 million.• $1.3 million increase in Solid Waste System; operational expenses increased in Sanitation and Landfilldivisions including the following: personnel with $79 thousand, materials and supplies $341 thousand,contractual services $929 thousand and Closure and Post Closure expenses of $208 thousand.• $1.3 million decrease in the Sewer System; operating expenses increased $700 thousand in thefollowing divisions: Administration $222 thousand, Wastewater Collection $269 thousand, anddepreciation expenses of $175 thousand. Non-operating expenses decreased by $2.1 million.• Bridge System increased by $641 thousand due to increases in operating expenses of $911 thousandand decreases in non-operating expenses of $270 thousand.• Other business-type activities decreased by $740 thousand in operating expenses for the TransitSystem and Municipal Housing Fund and others.FINANCIAL ANALYSIS OF THE CITY’S FUNDSAs noted earlier, the City of Laredo uses fund accounting to ensure and demonstrate compliance with financerelatedlegal requirements.Governmental funds. The focus of the City of Laredo is to provide information on near term inflows (currentresources) outflows, and balances of available resources. Such information is useful in assessing the City of11

Laredo’s financial requirements. In particular, unreserved fund balances may serve as a useful measure of theGovernment’s net resources available for spending at the end of the fiscal year.As the City completed the year, its governmental funds reported a combined fund balance of $158.2 million.The fund balance category is as follows: $134 thousand for non-spendable funds which are used for inventoryitems within general fund; $105 million which are restricted for debt and grants; $29.2 are committed forspecific purposes as it relates to reserves, public safety, etc.; $13.3 million are assigned for a specific use forGeneral Fund and $10.6 are unassigned which can be used by the City government as it is needed.The General Fund is the chief operating fund of the City of Laredo. At the end of the current fiscal year, fundbalance of the General Fund was $35.5 million of which $22.4 million is committed, and $10.7 is unassigned,$1.6 million is assigned and the remaining amount is restricted and non-spendable. As a measure of theGeneral Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance tototal fund expenses. A healthy unassigned General Fund balance represents 30.16 % of the total fund balancecategory.During the current fiscal year, the City’s General Fund balance increased by $574 thousand as compared toprior year. In spite of the current national economic crisis, the City was able to manage its resources andimplement a plan in order to save funds without interrupting or affecting services provided to the citizen of theLaredo. Some of the key factors are as follows:• As compared to prior year, property tax revenues slightly increased by $128 thousand. There was nogrowth in assessed valuations from prior year. The City has not increased its tax rate for the last eightconsecutive years. We remain hopeful that while other City’s revenues are constant, others areas willshow larger improvements.• Sales Tax revenues increased by $3.5 million as compared to the prior year. The increase is a greatindication that the Eagle Ford Shale gas industrial boom has significantly boosted the economy in ourCity this year.• Charges for Services increased by $472 thousand as compared to prior year.• General Fund expenses decreased by $2.9 million from prior year. Where most of the departmentsremained stable, growth (increases) occurred in categories such as: Public Safety by $3.1million,General Government by $431 thousand, and Cultural and Recreational by $670 thousand. Offsettingthe increases, capital outlay decreased by $7.2 million. The major increase for public safety was inpersonnel expenses by $3.0 million due to contractual obligations in payroll. Other Financing Usesreflected an increase of $2.2 million due partially to transfers-in from the Capital Improvements Fund.The Debt Service fund has a total fund balance of $8.3 million, all of which is reserved for the payment ofdebt. The Debt Service Fund had an increase of $1.9 million over prior year.Proprietary funds. The City of Laredo’s proprietary funds provide the same type of information found in theGovernment-wide Financial Statements, but in more detail.Total net assets of the Business – Type Activities at the end of the year totaled $344 million. The total netassets increased by $39 million as compared to prior year. The largest area of change is in the WaterworksSystem, with an increase of $26.8 million, and the Sewer System had an increase of $5.8 million. The OtherFunds category is reported at $43.6 million; a decreased of $5.6 million. An increase of $24.6 million is theresult of operations of the proprietary funds for the fiscal year. The increase can be further broken down intooperating revenues of $12.08 million and other non-operating revenues, net of expenses, of $6.3 million. Thebusiness-type activity funds increased in revenues in the amount of $12.1 million. Charges for Servicesrevenues increased by $11.5 million over prior year due to a higher number of customers serviced in the Waterand Sewer Systems. Capital Grants and Contributions increased by $12.2 million due to completion ofprojects financed with grants and contribution from other categories as it relates to intergovernmental funds.12

Other factors concerning the finances of this fund have already been addressed in the discussion of the City’sbusiness-type activities.General Fund Budgetary HighlightsOverall, the City has not only maintained at least a 15% fund balance as required by City Charter, but has alsohas been able to increase the rate to 25.12% of operating expenditures in FY 2011. Steadily and in spite ofcurrent economic conditions, the City has been able to sustain and strengthen its economic condition. Anexample of an indicator that led us to this position is that sales tax collections increased by 14.8% over prioryear and Hotel/Motel by 58.3% or $1.4 million as compared to budget. With appropriate planning andcautious financial spending, the City’s General Fund balance increased to $35,520,440 or 25.12% of operatingexpenditures as of September 30, 2011.Original Budget vs. Final Amended Budget:Revenues and Other Financing Sources:• During the year, the General Fund budget was amended by increasing additional appropriations of$3.5 million. The largest increase was to amend the budget in the capital outlay category in order toaccount for various City street improvements.Expenses and Other Financing Uses:• Surprisingly, the original and amended budget remained virtually unchanged thought the year; nochanges were made to the budget.Amended Budget as compared to Actual Expenses:Revenues:• The actual revenues reflect an overall favorable variance of $12.5 million as compared to the amendedbudget. This variance had various attributes:o Sales tax revenues increased by $3.35 million.o Contribution and Donations exceeded the projected revenues by $9.7 million. This amount isas a result of the recognition of the value of donated for storm drainage, street improvementsand sidewalk improvements by developers to the City.Expenses and Other Financing Sources (Uses):• An overall negative variance of $3.9 million when comparing the amended budget to the actualexpenses increased (prior to adjustments). A large portion of the increase was due to capital outlayand $3 million transferred from the Capital Improvement Fund for the completion of various projectsin General Fund during the year.o General Government realized savings in the amount of $1.3 million from various areasincluding the Municipal Court, City Attorney, Building, and Planning Departments.o Public Works realized savings of $839 thousand in the divisions of Drafting & Surveying,Street Maintenance and Street Construction.o Cultural & Recreational had savings of $1.1 million in the Library and & Cemetery divisions.o All other departments of General Fund played a proactive role in limiting and restrictingexpenses and ensuring that the City’s fund balance remain at the same level as in prior years.CAPITAL ASSET AND DEBT ADMINISTRATIONCapital AssetsThe City of Laredo’s investment in capital assets for its Governmental and Business-Type activities as ofSeptember 30, 2011 is $1.04 million (net of accumulated depreciation). The total increase in the City’sinvestment in capital assets for the current fiscal year was $142.2 million net increase over prior year.Additions, to capital assets such as land, infrastructure, equipment, construction in progress and buildings forthe year totaled $62.6 million for governmental activities and $36.9 million for business type activities.13

Deletions of such items were immaterial for the year. (Table A-3) Additional information about the City’sCapital Assets is presented in Note 8 to the financial statements.Table A-3City of Laredo – Capital AssetsGovernmentalBusiness-TypeActivitiesActivitiesTotal2011 2010 2011 2010 2011 2010Land $ 76,466,440 $ 70,500,680 $ 31,229,059 $ 31,180,460 $ 107,695,499 $ 101,681,140Buildings 161,893,800 148,755,547 103,983,287 96,084,537 265,877,087 244,840,084Machinery & Equipment 92,401,725 89,151,249 80,324,733 71,703,748 172,726,458 160,854,997Water Rights - 40,050,823 29,847,150 40,050,823 29,847,150Improve'ts other than Bldg 530,418,410 483,021,096 367,677,009 353,237,984 898,095,419 836,259,080Construction in Progress 19,810,403 5,266,211 83,622,885 66,962,317 103,433,288 72,228,528Total $ 880,990,778 $ 796,694,783 $ 706,887,796 $ 649,016,196 $ 1,587,878,574 $ 1,445,710,979Major capital asset acquisitions during the current fiscal year included the following:Governmental• Various land acquisitions totaling $6 million. Largely, the land acquisition was for the purchase of a CityHall Annex totaling $3.0 million, various Airport properties totaling $2.8 million.• Assets for Building category increased by $13.1 million mainly due to a City Hall Annex with a cost of$5.5 million for the building, an additional phase to the Haynes Recreation Center with a cost of $3.6million and several other recreational centers including the Civic Center with $500 thousand.• Infrastructure Improvements in the amount of $47.4 million for various projects including Airportrunways and cargo at a cost of $13 million, various industrial truck route with a cost of $6.7 million, StreetImprovements of $3.6 million, drainage improvements of $4.8 million, parks improvements of $19 millionincluding a municipal golf course and baseball stadium.• Machinery, equipment, vehicles and heavy equipment acquired during the fiscal year amounted to $3.3million for all departments within the City.• Construction in Progress increased by $14.5 due to commencement of various projects.Proprietary• Building capital assets increased by $7.9 million for the proprietary funds, this is mostly due to adesalination brackish water plant with a cost of $1.6 million, South and North Laredo Waste WaterTreatment Plants for a cost of $5.2 million and various other improvements.• Machinery, equipment, vehicles and heavy equipment acquired totaled $8.6 million. Some of the itemspurchased were landfill equipment totaling $2.2 million, $4.6 million for 14 buses in our Transit Systemand various equipment needs in the Water and Sewer Departments totaling $1.8 million.• Water Rights increased by $10.2 million.• Improvement other than building and construction in progress increased by $31.1 million which includesWater and Sewer plant improvements, collection and distribution systems.The Governmental activities consists of improvements to and / or construction of the City’s streets, parks andrecreational facilities, police substations, fire protection facility, and airport improvements. ContractualObligation bonds and grant awards are the primary financing mechanism for these capital improvements.14

The Business Type activities consist of improvements to and/or construction of water and wastewater systemsand international bridge improvements. These projects are primarily funded by the transfer of enterpriserevenues and the issuance of debt I.e.: Revenue Bonds.Long-term DebtAt year-end, the City had $314.8 million in outstanding bonds and other long term debt; an increase of $27.8million over last year (See Table A-4) for the Governmental Activities. The Business Type Activitiesrecorded an increase of $218.2 million. More detailed information about theCity’s long-term liabilities is presented in Note 11 and 12 of the financialstatements.New debt resulted mainly from various issues totaling $23.5 million; $3.5 fora General Obligation Refunding, $9.5 in Certificate of Obligation BondSeries 2011 for various capital projects and a Revenue Bond from paid fromsales tax for the construction of a new baseball stadium for $10.5 million.For proprietary debt, $80.4 million was issued for Water and Sewer SystemsBond RatingsThe City most recentgeneral obligation bondratings are the following:Standard & Poor’s AA-Moody’sAa2Fitch A+projects as well as a $5.8 million refunding. The issuance of long term debt is to finance various projectsincluding constructing City buildings, land acquisition, equipment and vehicles for vehicles for various CityDepartments and water rights acquisition.Table A-4City of Laredo’s Outstanding DebtGovernmentalBusiness-TypeActivities Activities Total2011 2010 2011 2010 2011 2010General obligation bonds $ 25,154,037 $ 24,945,491 $ 181,297,000 $ 26,894,509 $ 206,451,037 $ 51,840,000Certificates of obligation 168,839,892 167,815,685 113,545,109 123,299,316 282,385,001 291,115,001Revenue bonds 40,160,000 31,290,000 181,297,000 107,656,000 221,457,000 138,946,000Capital lease obligations 1,175,951 938,307 - - 1,175,951 938,307Compensated Absences 23,343,701 16,530,088 1,813,806 1,009,275 25,157,507 17,539,363Notes payable 680,000 765,000 19,637,040 20,494,474 20,317,040 21,259,474Net Penion Ob. - OPEB 55,468,398 44,707,668 - - 55,468,398 44,707,668Total $ 314,821,979 $ 286,992,239 $ 497,589,955 $ 279,353,574 $ 812,411,934 $ 566,345,813Economic Factors and Next Year’s Budgets and RatesThe City Council considered many factors when setting the fiscal year 2012 budget. General Fundrevenues for FY 11-12 are proposed to be $143,765,731; an increase of $6,156,126 or 4.47% over the prioryear’s original budget. Expenditures are proposed to be $143,821,421; an increase of $4,148,861 or 2.97%over prior year budgeted expenditures. The City’s unemployment rate increase by 0.2% to 7.7% as ofSeptember 30, 2011 compared to prior year’s 7.5%. This average places it slightly below the Stateaverage of 8.0%. Building permit revenues, sales tax revenues and bridge toll revenues are areas whichwe use to measure the local economy. These areas are showing slight growth and are good indicators ofthe local state of the economy.The total 2010-2011 consolidated budget revenue appropriation is $577,391,493 million. This representsan increase in revenues of $139.5 million or 31.88% over the 2010-2011 Original Budget. The propertytax rate for 2012 is .6370 per $100 valuation; the rate has remained the same for the last eighth consecutiveyears. Assessed valuations for FY 2012 are $10.5 billion which represents a decrease of 0.56% over prior15

year with an estimated levy of $66.8 million. Of the .6370 tax rate, 80.4% or .512296 cents are utilized forGeneral Fund activities, the remaining 19.6% or .124704 cents are used for Debt Service. The GeneralFund’s portion of property tax revenue for FY 2012 is projected to be $51.8 million. Sales tax revenuesfor the General Fund for FY 2012 are budgeted to be $27.4 million, an increase of $3.8 million or 16.27%as compared prior year’s budgeted amounts.A cost of living increase of 2% is included for all personnel beginning April 1 st , excluding the Fire andPolice Departments. The budget does include a $1.4 million or 4% salary increase for the PoliceDepartments as per contractual obligations. The proposed budget also includes $1.0 million salary increasefor Fire Department, an average of 3.25% depending on the position as per contractual obligations. Therewere a total of 2,617.60 full time equivalent positions with an estimated budget of $169.9 million.The City of Laredo will continue to work on various projects for continued economic growth in the area ofinternational trade through our airport and four international bridges. We will continue to revitalize ourdowntown, protect our green spaces, continue to rehabilitate our water and sewer lines, increase waterdistribution and water treatment for the future growth of our community, and create new park spaces suchas a baseball field and new golf course among other projects. These significant investments will helpassure future fiscal stability for the City and its citizens.Requests for InformationThis financial report is designed to provide our citizens, taxpayers, customers, investors, and creditorswith a general overview of the City’s finances and to demonstrate the City’s accountability for the moneyit receives. Questions concerning any of the information provided in this report or request for additionalfinancial information should be addressed to the Office of the Finance Director, 1110 Houston Street, Cityof Laredo, Texas, 78040.16

BASIC FINANCIAL STATEMENTS

CITY OF LAREDO, TEXASSTATEMENT OF NET ASSETSSeptember 30, 2011Primary GovernmentGovernmental Business-typeActivities Activities TotalASSETSCurrent Assets:Cash and Cash Equivalents: (Note 4)Cash $ 499,965 $ 16,700 $ 516,665Investments (Note 5) 172,838,330 80,279,110 253,117,440Receivable, net of allowances: (Note 6)Accrued Interest 1,501,975 68,586 1,570,561Property Taxes, Penalty and Interest 9,114,577 - 9,114,577Hotel-Motel Tax, Penalty and Interest 343,495 - 343,495Accounts 13,495,700 9,955,160 23,450,860Notes 14,760,391 16,180 14,776,571Paving Assessments 7,870 - 7,870Internal Balances (Note 13) (1,725,716) 1,725,716 -Due From Other Governments 6,901,489 927,860 7,829,349Inventory, at cost 489,314 1,606,872 2,096,186Prepaid Items 363,869 - 363,869Total Current Assets 218,591,259 94,596,184 313,187,443Noncurrent Assets:Restricted Assets: (Note 7)Investments (Note 5) - 147,398,442 147,398,442Accrued Interest - 194,486 194,486Notes - 63 63Due From Other Governments - 4,416,128 4,416,128Capital Assets: (Note 8)Nondepreciable Assets:Land and Improvements 76,466,440 71,279,883 147,746,323Construction in Progress 19,810,402 83,622,885 103,433,287Depreciable Assets:Buildings 161,893,799 103,983,287 265,877,086Machinery and Equipment 92,401,726 80,324,733 172,726,459Infrastructure 530,418,410 367,677,009 898,095,419Accumulated Depreciation (307,123,742) (241,382,673) (548,506,415)Unamortized Bond Issuance Costs 4,617,550 4,081,902 8,699,452Total Non Current Assets 578,484,585 621,596,145 1,200,080,730TOTAL ASSETS $ 797,075,844 $ 716,192,329 $ 1,513,268,173(Continued)17

CITY OF LAREDO, TEXASSTATEMENT OF NET ASSETSSeptember 30, 2011(Continued)Primary GovernmentGovernmental Business-typeActivities Activities TotalLIABILITIESCurrent Liabilities:Accounts Payable $ 5,872,090 $ 2,172,574 $ 8,044,664Claims and Judgments Payable (Note 18) 4,283,348 - 4,283,348Retainage Payable 2,344,195 2,750,449 5,094,644Accrued Wages and Employee Benefits 5,034,121 1,377,044 6,411,165Accrued Interest Payable 1,244,803 1,358,582 2,603,385Compensated Absences (Note 11 & 12) 2,630,835 726,404 3,357,239Contracts Payable 4,179,314 3,292,847 7,472,161Customer and Tenant Deposits 156,349 4,684,690 4,841,039Due To Other Governments 479,044 - 479,044Due to Developers 337,187 - 337,187Unearned Revenue 2,910,922 3,257,585 6,168,507General Obligation Bonds (Note 11 & 12) 3,476,586 5,538,414 9,015,000Certificates of Obligation (Note 11 & 12) 7,157,804 4,092,196 11,250,000Revenue Bond Payable (Note 11 & 12) 1,900,000 7,983,000 9,883,000Notes Payable (Note 11 & 12) 85,000 892,590 977,590Capital Lease Obligation (Note 11) 473,076 - 473,076Total Current Liabilities 42,564,674 38,126,375 80,691,049Noncurrent Liabilities:Noncurrent portion of long term liabilities:General Obligation Bonds (Note 11 & 12) 21,677,451 21,297,317 42,974,768Certificates of Obligation (Note 11 & 12) 161,682,088 109,452,913 271,135,001Revenue Bonds Payable (Note 11 & 12) 38,260,000 173,314,000 211,574,000Notes Payable (Note 11 & 12) 595,000 18,744,450 19,339,450Capital Lease Obligations (Note 11) 702,875 - 702,875Compensated Absences (Note 11 & 12) 20,712,866 1,087,402 21,800,268Net Pension Obligations - OPEB (Note 11) 55,468,398 - 55,468,398Landfill Closure & Postclosure Costs (Note 12) - 10,449,569 10,449,569Total Noncurrent Liabilities 299,098,678 334,345,651 633,444,329TOTAL LIABILITIES 341,663,352 372,472,026 714,135,378NET ASSETSInvestments in Capital Assets,net of related debt 404,332,329 273,496,354 677,828,683Restricted for:Debt Service 10,692,075 20,349,643 31,041,718Capital Projects 13,334,525 - 13,334,525Improvements - 5,530,289 5,530,289Canseco Endowment FundNonexpendable 72,365 - 72,365Unrestricted 26,981,198 44,344,017 71,325,215TOTAL NET ASSETS $ 455,412,492 $ 343,720,303 $ 799,132,795The notes to the financial statements are an integral part of this statement.18

Net (Expense) Revenue and Changes in Net AssetsProgram Revenues Primary GovernmentOperating CapitalCharges for Grants and Grants and Governmental Business-TypeExpenses Services Contributions Contributions Activities Activities TotalPrimary Government:Governmental Activities:General Government $ 33,212,469 40,374,802 984,808 - 8,147,141 - 8,147,141Public Safety 108,220,849 8,589,950 6,298,435 - (93,332,464) - (93,332,464)Public Works 28,971,676 2,158,284 1,555,902 32,935,915 7,678,425 - 7,678,425Health and Welfare 21,559,624 11,998,683 12,640,939 1,902,080 4,982,078 - 4,982,078Culture and Recreation 24,351,217 5,412,318 1,946,972 1,182,505 (15,809,422) - (15,809,422)Air Transportation 8,337,337 4,586,437 72,804 - (3,678,096) - (3,678,096)Interest and Other on Long-Term Debt 11,330,317 - - - (11,330,317) - (11,330,317)Total Governmental Activities 235,983,489 73,120,474 23,499,860 36,020,500 (103,342,655) - (103,342,655)Total Business-Type Activities 140,900,712 132,488,632 4,279,722 36,609,025 - 32,476,667 32,476,667Total Primary Government $ 376,884,201 205,609,106 27,779,582 72,629,525 (103,342,655) 32,476,667 (70,865,988)General Revenues:Property Taxes 69,142,902 - 69,142,902Sales Tax 39,050,113 6,311,745 45,361,858Franchise Tax 7,018,602 - 7,018,602Hotel Motel Tax 4,117,956 - 4,117,956Alcoholic Beverage Tax 329,521 - 329,521Unrestricted investment earnings 505,944 203,743 709,687Gain on sale of capital assets 1,327,296 152,893 1,480,189Bond Premium 829,086 5,439,668 6,268,754Transfers (Note 14) 5,842,964 (5,842,964) -Total general revenues and transfers 128,164,384 6,265,085 134,429,469Change in net assets 24,821,729 38,741,752 63,563,481Net assets-beginning 430,590,763 304,978,551 735,569,314Net assets-ending $ 455,412,492 343,720,303 799,132,795CITY OF LAREDO, TEXASSTATEMENT OF ACTIVITIESFor the Year Ended September 30, 2011Functions/Programs19Business-Type Activities:Transit System 15,011,164 3,971,867 4,259,641 4,991,135 - (1,788,521) (1,788,521)Bridge System 41,558,090 46,433,396 13,727 55,901 - 4,944,934 4,944,934Waterworks System 42,840,185 36,301,316 - 30,068,701 - 23,529,832 23,529,832Sewer System 24,269,283 27,711,393 6,354 1,425,575 - 4,874,039 4,874,039Solid Waste Management System 15,794,014 16,657,612 - 67,713 - 931,311 931,311Municipal Housing 1,427,976 1,413,048 - - - (14,928) (14,928)The notes to the financial statements are an integral part of this statement.

CITY OF LAREDO, TEXASBALANCE SHEETGOVERNMENTAL FUNDSSeptember 30, 2011OTHERTOTALDEBT GOVERNMENTAL GOVERNMENTALGENERAL SERVICE FUNDS FUNDSASSETSCash and Cash Equivalents:Cash $ 15,084 - 484,431 499,515Investments 38,286,530 8,269,231 121,011,349 167,567,110Receivable, net of allowances:Accrued Interest 40,502 3,913 1,451,867 1,496,282Taxes, Penalty and Interest (Note 6) 7,832,042 1,217,241 46,824 9,096,107Accounts (Note 6) 3,455,095 - 1,784,765 5,239,860Notes (Note 6) - - 14,760,391 14,760,391Paving Assessments (Note 6) - 7,870 - 7,870Due from Other Funds 2,955,441 - 2,950 2,958,391Due from Other Governments 358,194 - 6,543,295 6,901,489Inventory, at cost 14,937 - 69,161 84,098TOTAL ASSETS 52,957,825 9,498,255 146,155,033 208,611,113LIABILITIES AND FUND BALANCESLIABILITIESAccounts Payable 1,830,889 903 2,555,123 4,386,915Retainage Payable - - 2,344,195 2,344,195Accrued Wages and Employee Benefits 3,958,909 - 916,557 4,875,466Contracts Payable 34,843 - 4,144,471 4,179,314Customer and Tenant Deposits 625 - 155,724 156,349Due to Other Funds - - 3,171,805 3,171,805Due to Other Governments 387,044 - 92,000 479,044Due to Developers - - 337,187 337,187Deferred Revenue 11,225,075 1,225,324 17,990,827 30,441,226TOTAL LIABILITIES 17,437,385 1,226,227 31,707,889 50,371,501FUND BALANCES (Note 22)Nonspendable 14,937 - 119,161 134,098Restricted 786,681 8,272,028 95,987,821 105,046,530Committed 22,393,198 - 6,756,570 29,149,768Assigned 1,613,435 - 11,709,333 13,322,768Unassigned (Deficit) 10,712,189 - (125,741) 10,586,448TOTAL FUND BALANCES 35,520,440 8,272,028 114,447,144 158,239,612TOTAL LIABILITIES AND FUNDBALANCES $ 52,957,825 9,498,255 146,155,033Amounts reported for governmental activities in the statement of net assets are different because:Capital assets used in governmental activities are not financial resources and, therefore, are notreported in the funds. 572,956,104Other long-term assets are not available to pay for current-period expenditures and, therefore,are deferred in the funds. 9,806,101Internal service funds are used by management to charge the costs of fleet management, riskmanagement, and health benefits to individual funds. The assets and liabilities of the internalservice funds are included in the governmental activities in the statement of net assets. (72,468)Long-term liabilities, including bonds payable, are not due and payable in the current period andtherefore, are not reported in the funds. (Note 2) (285,516,857)Net assets of governmental activities $ 455,412,492The notes to the financial statements are in integral part of this statement.20

CITY OF LAREDO, TEXASSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSFor the Year Ended September 30, 2011OTHERTOTALDEBT GOVERNMENTAL GOVERNMENTALGENERAL SERVICE FUNDS FUNDSREVENUES:Taxes:Property $ 55,890,069 13,108,222 - 68,998,291Sales 26,935,219 - 6,733,805 33,669,024Franchise Fees 6,995,838 - - 6,995,838Bingo Tax 74,345 - - 74,345Alcoholic Beverage 341,545 - - 341,545Hotel Motel - - 4,055,510 4,055,510Licenses and Permits 5,795,171 - 692,547 6,487,718Intergovernmental Revenues 1,629,571 - 48,171,579 49,801,150Charges for Services 32,061,368 - 9,667,053 41,728,421Fines 3,248,911 - 514,066 3,762,977Fees and Collections 790,739 - 2,756,806 3,547,545Rents - - 5,731,032 5,731,032Interest and Other 931,281 67,636 512,963 1,511,880Miscellaneous 480,466 304,116 3,938,247 4,722,829Contributions & Donations 9,749,327 - 1,202,123 10,951,450Reimbursements - 38,578 2,242,035 2,280,613TOTAL REVENUES 144,923,850 13,518,552 86,217,766 244,660,168EXPENDITURES:Current:General Government 18,295,821 14,822 787,486 19,098,129Public Safety 92,803,746 - 8,253,548 101,057,294Public Works 7,049,101 - 3,136,007 10,185,108Health and Welfare 839,064 - 19,321,739 20,160,803Cultural and Recreational 11,139,218 - 12,501,448 23,640,666Air Transportation Services - - 4,651,685 4,651,685Capital Outlay 11,291,552 - 74,420,482 85,712,034Debt Service:Bond Costs - 64,452 640,403 704,855Principal Retirement - 9,676,355 570,009 10,246,364Interest and Fiscal Expenditures - 10,816,364 50,550 10,866,914TOTAL EXPENDITURES 141,418,502 20,571,993 124,333,357 286,323,852Excess (Deficiency) of Revenues Over(Under) Expenditures 3,505,348 (7,053,441) (38,115,591) (41,663,684)OTHER FINANCING SOURCES (USES):Transfers In 6,681,267 8,736,563 31,282,112 46,699,942Issuance of Debt - 3,199,078 19,990,000 23,189,078Bond Premium - 178,683 650,403 829,086Transfers Out (9,738,939) - (29,334,061) (39,073,000)Capital Leases - - 807,653 807,653Sale of Assets 126,432 - 1,248,646 1,375,078Payment to Refunded Bond Escrow Agent - (3,317,933) - (3,317,933)TOTAL OTHER FINANCINGSOURCES (USES) (2,931,240) 8,796,391 24,644,753 30,509,904Net Change in Fund Balances 574,108 1,742,950 (13,470,838) (11,153,780)Fund Balances-Beginning 34,946,332 6,529,078 127,917,982 169,393,392FUND BALANCES-ENDING $ 35,520,440 8,272,028 114,447,144 158,239,61221

CITY OF LAREDO, TEXASRECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIESFor the Year Ended September 30, 2011Amounts reported for governmental activities in the statement of activities aredifferent because:Net change in fund balances-total governmental funds $ (11,153,780)Governmental funds report capital outlays as expenditures. However in thestatement of activities the cost of those assets is allocated over their estimateduseful lives and reported as depreciation expense. This is the amount by whichcapital outlays exceeded depreciation in the current period. (Note 2) 59,956,857Revenues in the statement of activities that do not provide current financial resourcesare not reported as revenues in the funds. 8,131,933The issuance of long-term debt (e.g., bonds, leases) provides current financialresources to governmental funds, while the repayment of the principal of long-termdebt consumes the current financial resources of governmental funds. Neithertransaction, however, has any effect on net assets. Also, governmental fundsreport the effect of issuance costs, premiums, discounts, and similar items whendebt is first issued, whereas these amounts are deferred and amortized in thestatement of activities. This amount is the net effect of these differences in thetreatment of long-term debt and related items. (Note 2) (10,432,434)Accrued interest expense recorded for entity-wide statements. 60,141Some expenses reported in the statement of activities do not require the use ofcurrent financial resources and, therefore, are not reported as expenditures ingovernmental funds. (19,848,584)Internal service funds are used by management to charge the costs of fleetmanagement, risk management, and health and benefits to individual funds.The net revenue of certain activities of internal service funds is reported withgovernmental activities. (1,892,404)Change in net assets of governmental activities $ 24,821,72922

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CITY OF LAREDO, TEXASGENERAL FUNDSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCES - BUDGET AND ACTUALYear Ended September 30, 2011Budgeted Amounts Actual VarianceBudgetPositiveOriginal Final Actual Adjustments Basis (Negative)REVENUES:TaxesProperty Taxes $ 54,109,923 54,109,923 53,783,005 - 53,783,005 (326,918)Penalty and Interest 2,421,767 2,421,767 2,107,064 - 2,107,064 (314,703)Alcoholic Beverage 314,028 314,028 341,545 - 341,545 27,517Bingo Tax 73,153 73,153 74,345 - 74,345 1,192Sales and Use 23,589,876 23,589,876 26,935,219 - 26,935,219 3,345,343Franchise Fees 6,645,215 6,645,215 6,995,838 - 6,995,838 350,623Licenses and Permits 5,856,543 5,856,543 5,795,171 - 5,795,171 (61,372)Intergovernmental Revenues 622,500 2,107,842 1,629,571 - 1,629,571 (478,271)Charges for Services 32,198,266 32,198,266 32,061,368 - 32,061,368 (136,898)Fines 3,394,911 3,394,911 3,248,911 - 3,248,911 (146,000)Fees and Collections 744,297 744,297 790,739 - 790,739 46,442Interest and Other 922,047 922,047 931,281 - 931,281 9,234Miscellaneous 4,893 40,532 480,466 - 480,466 439,934Contributions and Donations 15,000 15,000 9,749,327 - 9,749,327 9,734,327TOTAL REVENUES 130,912,419 132,433,400 144,923,850 - 144,923,850 12,490,450EXPENDITURES:General GovernmentMayor and City Council 730,270 741,310 747,064 4,863 751,927 (10,617)City Manager 1,200,526 1,201,026 1,195,295 3,197 1,198,492 2,534Internal Audit 240,405 240,405 237,591 - 237,591 2,814Public Information Office 175,321 174,821 86,254 156 86,410 88,411City Hall Maintenance 530,165 530,165 452,865 65,272 518,137 12,028Municipal Court 1,472,707 1,485,946 1,317,366 16,269 1,333,635 152,311Building Inspections 1,539,897 1,509,897 1,282,574 1,494 1,284,068 225,829Development Review Engineering 490,076 489,917 508,728 - 508,728 (18,811)Code Enforcement 340,512 340,512 337,235 - 337,235 3,277Public Right of Way 198,875 199,034 196,532 - 196,532 2,502Geographic Information Systems 204,913 204,913 193,508 2,231 195,739 9,174City Attorney 1,021,245 1,021,245 892,478 8,159 900,637 120,608City Secretary 449,186 457,911 426,102 2,250 428,352 29,559Elections 87,492 275,823 274,221 - 274,221 1,602Tax Office 1,058,789 1,058,789 1,035,938 3,565 1,039,503 19,286Accounting 1,180,614 1,175,104 1,080,648 677 1,081,325 93,779Purchasing 483,910 483,910 480,506 1,126 481,632 2,278Payroll 218,809 218,809 216,775 255 217,030 1,779Accounts Payable 347,100 351,700 351,698 320 352,018 (318)Budget 362,596 363,506 361,640 351 361,991 1,515Personnel and Civil Service 538,739 538,739 518,335 128 518,463 20,276Training 334,021 334,021 291,776 105 291,881 42,140Planning 909,474 933,474 847,343 16,136 863,479 69,995Section 112 500,000 500,000 283,926 902 284,828 215,172311 Program 297,952 297,952 269,280 27,389 296,669 1,283Communications & Admin. Support 341,605 341,605 247,845 6,118 253,963 87,642Center for Non-Profit 97,379 97,379 90,537 2,178 92,715 4,664Real Estate 165,358 175,358 159,203 9,800 169,003 6,355Economic Development 75,000 75,000 - - - 75,000Public SafetyPolice 4,139,742 4,259,803 3,897,386 32,890 3,930,276 329,527Records/Property 1,313,130 1,312,585 1,178,585 1,888 1,180,473 132,112Autotheft Grant Match 813,514 699,238 638,663 - 638,663 60,575Detective 5,801,983 5,556,093 5,406,773 11,646 5,418,419 137,674LISD SRO Program 11,205 - - - - -Narcotics/Pipeline/K-9 3,286,953 3,261,166 3,010,767 14,884 3,025,651 235,515911 Communications 2,749,481 2,782,525 2,431,069 - 2,431,069 351,456Criminal Int. Acquisition 387,627 385,965 361,452 1,523 362,975 22,990Patrols 34,436,185 34,718,221 34,667,037 305,619 34,972,656 (254,435)Fire 23,763,599 23,719,497 24,813,386 19,439 24,832,825 (1,113,328)Fire - EMS Division 8,287,077 8,293,806 7,684,557 3,013 7,687,570 606,236Fire - EMS Trauma (Webb Co.) 14,000 14,000 6,650 - 6,650 7,350Fire Civilians 551,782 572,022 611,431 - 611,431 (39,409)Fire - Prevention & Arson 1,566,354 1,578,072 1,467,252 11 1,467,263 110,809Fire Airport 975,269 976,664 1,143,472 - 1,143,472 (166,808)Fire - Training (In House) 438,286 442,251 505,860 - 505,860 (63,609)Fire - Training 418,895 419,472 402,409 1,115 403,524 15,948Fire Emergency Management 12,294 11,772 11,878 780 12,658 (886)Homeland Security Grant - 101,756 27,500 16,366 43,866 57,890Traffic 2,443,556 2,463,490 2,360,236 4,060 2,364,296 99,194Street Lighting $ 2,280,834 2,252,134 2,177,383 - 2,177,383 74,751(Continued)24

CITY OF LAREDO, TEXASGENERAL FUNDSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCES - BUDGET AND ACTUALYear Ended September 30, 2011Budgeted Amounts Actual VarianceBudgetPositiveOriginal Final Actual Adjustments Basis (Negative)Public WorksAdministration $ 711,419 733,225 673,471 14,103 687,574 45,651Engineering 565,405 565,405 557,817 299 558,116 7,289Street Maintenance 1,231,639 1,226,939 954,410 11,850 966,260 260,679Drafting & Surveying 1,212,945 1,215,732 968,093 1,101 969,194 246,538Street Construction 1,071,786 1,015,508 912,433 6,456 918,889 96,619Construction & Inspections 476,743 473,956 504,973 589 505,562 (31,606)Street Cleaning 1,362,328 1,364,678 1,280,637 970 1,281,607 83,071Building Rehabilitation 810,896 808,396 629,467 2,730 632,197 176,199Warehouse 111,170 103,034 90,239 822 91,061 11,973Special Construction Projects 437,734 419,396 477,561 - 477,561 (58,165)Health and WelfareThird-Party Funding 696,700 696,700 689,900 2,952 692,852 3,848Non CDBG Code Enforcement 154,645 154,645 149,164 418 149,582 5,063Cultural and RecreationalParks 555,449 549,962 469,088 3,304 472,392 77,570Maintenance 4,474,530 4,534,893 4,645,347 82,555 4,727,902 (193,009)Recreation 681,700 666,200 837,876 4,124 842,000 (175,800)Recreation Centers 1,816,850 1,767,688 1,802,643 34,633 1,837,276 (69,588)Cemetery 325,287 325,287 298,548 3,418 301,966 23,321Library 3,536,707 3,536,052 3,085,716 136,652 3,222,368 313,684Other 4,480,564 4,996,008 3,912,558 8,835 3,921,393 1,074,615Capital Outlay - 2,727,673 11,291,552 236,202 11,527,754 (8,800,081)TOTAL EXPENDITURES 133,999,199 137,520,180 141,418,502 1,138,188 142,556,690 (5,036,510)Excess (Deficiency) of Revenues OverExpenditures (3,086,780) (5,086,780) 3,505,348 (1,138,188) 2,367,160 7,453,940OTHER FINANCING SOURCES (USES):Transfers In:Hotel Motel Fund 19,807 19,807 7,538 - 7,538 (12,269)Capital Improvements Fund 3,889,751 3,889,751 3,889,751 - 3,889,751 -Parking Meters 1,000,000 1,000,000 1,000,000 - 1,000,000 -Fleet Management 457,591 457,591 457,591 - 457,591 -Risk Management 1,026,387 1,026,387 1,026,387 - 1,026,387 -Information Technology 300,000 300,000 300,000 - 300,000 -Transfers Out:Auto Theft Task Force (241,646) (241,646) (235,507) - (235,507) 6,139Health Fund (2,985,441) (2,985,441) (3,058,484) - (3,058,484) (73,043)Special Police Program (190,112) (190,112) (50,401) - (50,401) 139,711Public Access Fund (312,121) (312,121) (304,287) - (304,287) 7,834Special Fire Grants (1,059,269) (1,059,269) (1,090,260) - (1,090,260) (30,991)Debt Service Fund (2,000,000) (2,000,000) (2,000,000) - (2,000,000) -Capital Improvements Fund - - (3,000,000) - (3,000,000) (3,000,000)Sale of Assets 3,650 3,650 126,432 - 126,432 122,782TOTAL OTHER FINANCING SOURCES(USES) (91,403) (91,403) (2,931,240) - (2,931,240) (2,839,837)Net Change in Fund Balance (3,178,183) (5,178,183) 574,108 (1,138,188) (564,080) 4,614,103Fund Balances at Beginning of Year 32,968,293 34,946,332 34,946,332 (42,235) 34,904,097 (42,235)FUND BALANCES AT END OF YEAR $ 29,790,110 29,768,149 35,520,440 (1,180,423) 34,340,017 4,571,868The notes to the financial statements are an integral part of this statement.25

BRIDGE WATERWORKS SEWER OTHER INTERNAL SERVICESYSTEM SYSTEM SYSTEM ENTERPRISE FUNDS TOTALS FUNDSCurrent Assets:Cash and Cash Equivalents: (Note 4)Cash $ 10,000 1,950 300 4,450 16,700 450Investments (Note 5) 8,261,309 33,704,115 25,462,572 12,851,114 80,279,110 5,271,220Receivable:Accrued Interest 4,788 31,253 21,702 10,843 68,586 5,693Accounts (Note 6) 655,492 4,351,169 3,731,552 1,216,947 9,955,160 470,863Notes (Note 6) - 607 15,573 - 16,180 -Prepaid Items - - - - - 363,869Due From Other Governments 3,571 44,225 12,817 867,247 927,860 -Due From Other Funds - 368,797 10,582 3,020,974 3,400,353 -Inventory, at Cost - 1,001,767 71,999 533,106 1,606,872 405,216Total Restricted Assets (Note 7) 4,925,033 111,283,191 26,076,061 11,129,901 153,414,186 -Capital Assets: (Note 8)Transportation Vehicles and Equipment 14,998,133 8,417,463 8,090,771 48,818,366 80,324,733 1,634,650Buildings 33,617,727 23,917,848 27,403,618 19,044,094 103,983,287 401,188Improvements 79,274,590 154,422,056 121,178,164 12,802,199 367,677,009 11,391Land and Improvements 11,265,265 44,686,054 4,531,525 10,425,110 70,907,954 -Land Easements - 170,534 201,395 - 371,929 -Construction in Progress 2,017,143 60,961,884 19,498,038 1,145,820 83,622,885 -Less Accumulated Depreciation (44,961,415) (92,880,401) (61,020,411) (42,520,446) (241,382,673) (1,136,298)Total Capital Assets (net ofaccumulated depreciation) 96,211,443 199,695,438 119,883,100 49,715,143 465,505,124 910,931Other Assets:Unamortized Bond Issuance Costs 1,331,506 1,961,025 671,581 117,790 4,081,902 -Total Noncurrent Assets 102,467,982 312,939,654 146,630,742 60,962,834 623,001,212 910,931TOTAL ASSETS $ 111,403,142 352,443,537 175,957,839 79,467,515 719,272,033 7,428,242(Continued)CITY OF LAREDO, TEXASSTATEMENT OF NET ASSETSPROPRIETARY FUNDSSeptember 30, 2011BUSINESS-TYPE ACTIVITIES-ENTERPRISE FUNDSASSETS26Total Current Assets 8,935,160 39,503,883 29,327,097 18,504,681 96,270,821 6,517,311Noncurrent Assets:Restricted Assets:Investments (Note 5) 4,924,974 106,697,849 26,050,902 9,724,717 147,398,442 -Accrued Interest Receivable 59 169,151 25,159 117 194,486 -Notes Receivable (Note 6) - 63 - - 63 -Due From Other Funds - - - 1,405,067 1,405,067 -Due From Other Governments - 4,416,128 - - 4,416,128 -

(Continued)BRIDGE WATERWORKS SEWER OTHER INTERNAL SERVICESYSTEM SYSTEM SYSTEM ENTERPRISE FUNDS TOTALS FUNDSNoncurrent Liabilities:General Obligation Bonds (Note 12) - 10,716,866 6,718,118 3,862,333 21,297,317 -Certificates of Obligation (Note 12) - 63,378,500 30,528,310 15,546,103 109,452,913 -Revenue Bonds Payable (Note 12) 50,595,000 95,973,000 26,746,000 - 173,314,000 -Notes Payable (Note 12) 18,744,450 - - - 18,744,450 -Compensated Absences 355,042 279,066 87,471 365,823 1,087,402 210,753Closure and Postclosure Cost (Note 12) - - - 10,449,569 10,449,569 -Total Noncurrent Liabilities 69,694,492 170,347,432 64,079,899 30,223,828 334,345,651 210,753TOTAL LIABILITIES 77,645,447 191,792,113 71,069,942 35,823,742 376,331,244 7,034,828Invested in Capital Assets, Net of Related Debt 25,551,720 133,657,327 82,514,140 31,773,167 273,496,354 910,931Restricted for Debt Service 4,792,178 10,556,270 5,001,195 - 20,349,643 -Restricted for Improvements - 5,530,289 - - 5,530,289 -Unrestricted (Deficit) 3,413,797 10,907,538 17,372,562 11,870,606 43,564,503 (517,517)TOTAL NET ASSETS $ 33,757,695 160,651,424 104,887,897 43,643,773 342,940,789 393,414CITY OF LAREDO, TEXASSTATEMENT OF NET ASSETSPROPRIETARY FUNDSSeptember 30, 2011BUSINESS-TYPE ACTIVITIES-ENTERPRISE FUNDSLIABILITIES27Current Liabilities:Accounts Payable $ 178,166 1,058,524 402,659 533,225 2,172,574 1,485,174Retainage Payable 85,617 2,341,348 310,495 12,989 2,750,449 -Contracts Payable 244,365 2,081,458 844,751 122,273 3,292,847 -Due To Other Funds (Note 13) - 1,901,209 10,582 1,947,427 3,859,218 714,509Accrued Interest - 902,500 321,212 134,870 1,358,582 -Accrued Wages & Employee Benefits 273,619 384,024 167,787 551,614 1,377,044 158,655Claims and Judgments Payable - - - - - 4,283,348Compensated Absences 202,315 184,108 72,712 267,269 726,404 102,880Customer Deposits 8,000 4,589,799 - 86,891 4,684,690 -Unearned Revenue 1,676,283 1,467,009 61,751 52,542 3,257,585 79,509General Obligation Bonds (Note 12) - 2,875,951 2,200,709 461,754 5,538,414 -Certificates of Obligation (Note 12) - 1,061,751 1,601,385 1,429,060 4,092,196 -Revenue Bonds Payable (Note 12) 4,390,000 2,597,000 996,000 - 7,983,000 -Notes Payable (Note 12) 892,590 - - - 892,590 -Total Current Liabilities 7,950,955 21,444,681 6,990,043 5,599,914 41,985,593 6,824,075NET ASSETSAdjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 779,514Net assets of business-type activities $ 343,720,303The notes to the financial statements are an integral part of this statement.

BRIDGE WATERWORKS SEWER OTHER INTERNAL SERVICESYSTEM SYSTEM SYSTEM ENTERPRISE FUNDS TOTALS FUNDSCharges for Services $ - 31,431,680 27,438,365 20,060,860 78,930,905 36,529,348Rental of Facilities 2,734,637 - - 1,775,801 4,510,438 -Toll Receipts 43,638,202 - - - 43,638,202 -Miscellaneous 59,631 3,625,787 100,640 179,945 3,966,003 1,027,849TOTAL OPERATING REVENUES 46,432,470 35,057,467 27,539,005 22,016,606 131,045,548 37,557,197Operating Income (Loss) 8,818,928 10,560,265 8,828,616 (9,186,011) 19,021,798 (92,714)Intergovernmental (Continued)13,727 - 6,354 - 20,081 125Sales Tax - - - 6,311,745 6,311,745 -Interest Earnings 23,032 951,413 64,847 36,465 1,075,757 19,409Interest Earnings - Restricted 55,901 800,957 171,246 68,430 1,096,534 -Discount Earnings - 4,205 8,983 6,631 19,819 122Premiums - 4,550,647 701,569 187,452 5,439,668 -Miscellaneous - 366,374 162,762 16,355 545,491 -Gain (Loss) On Sale of Assets 2,608 29,293 99,668 21,324 152,893 (47,907)Interest Expense (3,697,171) (8,737,268) (3,083,142) (959,279) (16,476,860) -Federal Operating Grant - - - 3,588,224 3,588,224 -Gain (Loss) on Advance Funding - (18,271) - - (18,271) -Water Availability - (343,824) - - (343,824) -Other Non-Operating Expenses - (9,139,482) (2,402,968) - (11,542,450) -Fiscal Agent Fees (1,300) (3,425) (3,725) (125) (8,575) -Bond Issuance Cost Amortized (137,365) (93,927) (65,587) (37,745) (334,624) -State Dept. of Highways - - - 671,417 671,417 -Construction (103,709) - - (16,880) (120,589) -Other - - - (645) (645) -TOTAL NON-OPERATING REVENUES(EXPENSES) (3,844,277) (11,633,308) (4,339,993) 9,893,369 (9,924,209) (28,251)CITY OF LAREDO, TEXASSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDSYear ended September 30, 2011BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDSOPERATING REVENUES:OPERATING EXPENSES:28Costs of Services - - - - - 29,906,620Personnel Services 7,451,573 7,299,538 3,404,848 14,689,459 32,845,418 4,321,997Materials and Supplies 566,377 2,633,448 1,410,241 4,095,921 8,705,987 293,249Contractual Services 25,377,182 7,183,318 7,692,813 7,202,801 47,456,114 2,933,393Other 25,688 120,803 107,190 654,580 908,261 840Total Operating Expenses BeforeDepreciation 33,420,820 17,237,107 12,615,092 26,642,761 89,915,780 37,456,099Depreciation Expense (Note 8) 4,192,722 7,260,095 6,095,297 4,559,856 22,107,970 193,812TOTAL OPERATING EXPENSES 37,613,542 24,497,202 18,710,389 31,202,617 112,023,750 37,649,911NON-OPERATING REVENUES (EXPENSES):

BRIDGE WATERWORKS SEWER OTHER INTERNAL SERVICESYSTEM SYSTEM SYSTEM ENTERPRISE FUNDS TOTALS FUNDSIncome Before Contributions and Transfers 4,974,651 (1,073,043) 4,488,623 707,358 9,097,589 (120,965)Capital Contributions-Intergovernmental - 26,942,569 - 4,990,418 31,932,987 -Capital Contributions-Waterrights - 1,035,367 - - 1,035,367 -Capital Contributions-Other - 144,210 290,602 - 434,812 -Capital Contributions-Developers - 1,145,598 963,727 - 2,109,325 -Transfers In - - - 288 288 186,637Transfers Out (4,468,108) (1,375,144) - - (5,843,252) (1,970,615)Change in Net Assets 506,543 26,819,557 5,742,952 5,698,064 38,767,116 (1,904,943)Total Net Assets-Beginning 33,251,152 133,831,867 99,144,945 37,945,709 2,298,357Total Net Assets-Ending $ 33,757,695 160,651,424 104,887,897 43,643,773 393,414CITY OF LAREDO, TEXASSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSPROPRIETARY FUNDSYear ended September 30, 2011BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS(Continued)29Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (25,364)Change in net assets of business-type activities $ 38,741,752The notes to the financial statements are an integral part of this statement.

BRIDGE WATERWORKS SEWER OTHER INTERNAL SERVICESYSTEM SYSTEM SYSTEM ENTERPRISE FUNDS TOTALS FUNDSReceipts from customers and users $ 47,146,776 33,369,541 26,439,088 22,155,473 129,110,878 941,732Receipts from interfund services provided - 531,540 493,573 177,180 1,202,293 36,529,348Payments to suppliers (3,312,544) (8,735,599) (9,383,788) (12,130,398) (33,562,329) (31,860,505)Payments to employees (7,358,465) (7,155,952) (3,329,338) (10,569,667) (28,413,422) (4,323,793)Payments for interfund services used (22,311,962) (2,177,852) (1,638,102) (4,601,132) (30,729,048) (718,658)Net cash provided (used) by operating activities 14,163,805 15,831,678 12,581,433 (4,968,544) 37,608,372 568,124Proceeds from capital debt - 77,884,944 11,885,181 3,156,553 92,926,678 -Capital contributions - 1,035,367 12,614 - 1,047,981 -Subsidy from federal and state grants - 30,078,510 - 5,004,624 35,083,134 -Purchases of capital assets - (47,942,329) (9,447,148) (2,340,155) (59,729,632) (303,050)Acquisition and construction of capital assets (3,433,693) - - (5,602,884) (9,036,577) -Principal paid on capital debt (5,087,435) (9,544,541) (5,176,563) (5,000,516) (24,809,055) -Interest paid on capital debt (3,698,470) (8,473,597) (3,063,924) (951,240) (16,187,231) -Proceeds from sales of capital assets 2,608 62,599 99,668 21,324 186,199 23,488Net cash provided (used) by capitaland related financing activities (12,216,990) 43,100,953 (5,690,172) (5,712,294) 19,481,497 (279,562)Proceeds from sales and maturities of investments 2,402,443 (58,822,903) (7,453,907) (1,866,639) (65,741,006) 1,401,913Interest and dividends received 82,311 1,614,437 248,071 116,862 2,061,681 26,952Issuance of Notes Receivable - 12,668 3,655 - 16,323 -Net cash provided (used) by investing activities 2,484,754 (57,195,798) (7,202,181) (1,749,777) (63,663,002) 1,428,865Net increase (decrease) in cashand cash equivalents (11,400) (200) - (9,108) (20,708) 50Cash and cash equivalents, October 1 21,400 2,150 300 13,558 37,408 400Cash and cash equivalents, September 30 $ 10,000 1,950 300 4,450 16,700 450(Continued)CITY OF LAREDO, TEXASSTATEMENT OF CASH FLOWSPROPRIETARY FUNDSYear ended September 30, 2011BUSINESS-TYPE ACTIVITIES-ENTERPRISE FUNDSCASH FLOW FROM OPERATING ACTIVITIES:CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:30Transfer to other funds (4,468,108) (1,758,247) - 1,839,678 (4,386,677) (1,970,615)Transfer from other funds - - - 569,932 569,932 253,113Subsidy from federal and state grants 25,139 21,214 310,920 3,700,152 4,057,425 125Sales Tax - - - 6,311,745 6,311,745 -Net cash provided (used) by noncapitaland related financing activities (4,442,969) (1,737,033) 310,920 12,421,507 6,552,425 (1,717,377)CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:CASH FLOWS FROM INVESTING ACTIVITIES:

(Continued)BRIDGE WATERWORKS SEWER OTHER INTERNAL SERVICESYSTEM SYSTEM SYSTEM ENTERPRISE FUNDS TOTALS FUNDSTotal adjustments 5,344,877 5,271,413 3,752,817 4,217,467 18,586,574 660,836Net cash provided (used) by operating activities $ 14,163,805 15,831,678 12,581,433 (4,968,544) 37,608,372 568,124Noncash investing, capital, and financingactivities:Bond issuance cost amortized 137,365 41,676 63,338 29,870 272,249 -Contributions of capital assets from developers & others - 1,289,808 1,241,715 - 2,531,523 -Current Landfill Closure and Postclosure cost - - - 462,989 462,989 -Loss on advance refunding - 228,586 - - 228,586 -Increase (Decrease) in Accrued Interest Payable - 267,096 (22,943) 17,654 261,807 -CITY OF LAREDO, TEXASSTATEMENT OF CASH FLOWSPROPRIETARY FUNDSYear ended September 30, 201131Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ 8,818,928 10,560,265 8,828,616 (9,186,011) 19,021,798 (92,712)Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 4,192,722 7,260,095 6,095,297 4,559,856 22,107,970 193,812(Increase) decrease in landfill closure and post closure cost - - - 462,989 462,989 -(Increase) decrease in accounts receivable 628,474 (1,150,329) (737,603) 246,452 (1,013,006) (165,722)Increase (decrease) in allowance for uncollectible accounts (373) 64,324 88,736 66,450 219,137 97(Increase) decrease in inventories - (213,309) 9,272 22,860 (181,177) (12,207)(Increase) decrease in prepaid items - - - - - (21,394)Increase (decrease) in customer deposits (36,435) 208,170 - 1,127 172,862 -Increase (decrease) in accounts payable 344,741 (762,573) (1,820,918) (1,210,390) (3,449,140) 174,789Increase (decrease) in unearned revenues 122,640 (278,551) 42,523 2,018 (111,370) 79,509Increase (decrease) in compensated absences payable 50,224 51,243 25,817 12,682 139,966 (12,825)Increase (decrease) in accrued wages and employee benefits 42,884 92,343 49,693 53,423 238,343 11,027Increase (decrease) in claims & judgements payables - - - - - 413,750The notes to the financial statements are an integral part of this statement.

CITY OF LAREDO, TEXASSTATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDSSEPTEMBER 30, 2011LAREDOFIREFIGHTERSRETIREMENTSYSTEMPENSIONTRUST FUNDAGENCYFUNDSASSETSCash and Cash Equivalents (Note 4) $ 186,761 -Accrued Interest Receivable 25,871 2,033Investments, at Fair Market Value (Note 5) - 1,881,708Investment with Fiscal Agent, at Fair Market Value (Note 5): -Money Market Funds 1,177,447 -Foreign Money Market Funds 31,127,201 -Domestic Corporate Bonds 14,016,945 -Domestic Stocks 34,769,298 -Foreign Stocks 2,819,129 -Accounts Receivable (Note 6) 10,835 20,974TOTAL ASSETS 84,133,487 1,904,715LIABILITIESAccounts Payable 50,495 1,747,240Accrued Wages and Employee Benefits 2,068 9,871Deferred Revenues - 129,324Due To Other Funds - 18,280TOTAL LIABILITIES 52,563 1,904,715NET ASSETSHeld In Trust for Pension Benefits, Plan Participants,and Other Purposes $ 84,080,924 -The notes to the financial statements are an integral part of this statement.32

CITY OF LAREDO, TEXASSTATEMENT OF CHANGES IN FIDUCIARY NET ASSETSFIDUCIARY FUNDSFOR THE YEAR ENDED SEPTEMBER 30, 2011LAREDOFIREFIGHTERSRETIREMENTSYSTEMPENSIONTRUST FUNDCITY ANNUITYPENSIONTRUST FUNDADDITIONS:Contributions:Employer contributions $ 4,644,823 831,928Plan members 3,667,573 129,615Other contributions 22,521 30,427Total Contributions 8,334,917 991,970Investment Earnings:Interest earnings and dividends 1,113,425 -Net increase (decrease) in the fairvalue of investments (902,098) -Gains (Loss) on sale of investment 2,187,030 -Total investment earnings 2,398,357 -Less: investment expense (399,745) -Net Investment Earnings 1,998,612 -TOTAL ADDITIONS 10,333,529 991,970DEDUCTIONS:Benefits 6,632,055 920,426Administrative Expenses 346,718 71,544TOTAL DEDUCTIONS 6,978,773 991,970Change in Net Assets 3,354,756 -Net Assets - Beginning 80,726,168 -NET ASSETS - ENDING $ 84,080,924 -The notes to the financial statements are an integral part of this statement.33

CITY OF LAREDO, TEXASNOTES TO THE BASIC FINANCIAL STATEMENTSSeptember 30, 2011________________________________________________________________1 Significant Accounting Policies 352 Reconciliation of Government-Wide and FundFinancial Statements 463 Fund Deficits 474 Cash and Cash Equivalents 475 Investments 486 Receivables 507 Restricted Assets for Enterprise Fund Types 518 Capital Assets 519 Retirement Plans 5310 Post Employment Benefits Other Than Pension Benefits 5811 General Long-Term Obligations 6212 Proprietary Funds Long-Term Obligations 6713 Interfund Receivable and Payables 7414 Interfund Transfers 7515 Debt Service Requirements 7616 Construction and Improvement Commitments 7717 Fund Expenditures Exceeding Appropriations 7718 Risk Management 7719 Contingencies 7920 Donor Restricted Endowments 7921 Budget Basis Reporting 8022 Fund Equity 8034

CITY OF LAREDO, TEXASNOTES TO THE BASIC FINANCIAL STATEMENTSSEPTEMBER 30, 2011The accounting methods and procedures adopted by the City of Laredo, Texas conform to generalaccepted accounting principles as applied to governmental entities. The following notes to thefinancial statements are an integral part of the City’s Basic Financial Statements.NOTE 1 – SIGNIFICANT ACCOUNTING POLICIESA. Reporting EntityThe City of Laredo, Texas (the City) is a municipal corporation incorporated under Article XI,Section 5 of the Constitution of the State of Texas (Home Rule Amendment). The City operatesunder a Council-Manager form of government and provides a full range of municipal services asauthorized by its charter. The services include public safety (police and fire), highways and streets,sanitation, health and social services, culture and recreation, public improvements, planning andzoning, and general administrative services. In addition, the City owns and operates certain majoractivities including an airport, a transit system, water and sewer utility system, a landfill, and abridge system.The City has defined its reporting entity in accordance with GASB 14, "The Financial ReportingEntity". The component units discussed below are included in the City's reporting entity because atleast one of the following criteria are satisfied: the elected officials of the City are financiallyaccountable for the entity, or the nature and significance of the relationship between the entity andthe City are such that to exclude the entity from the reporting entity would render the financialstatements misleading or incomplete. In conformity with generally accepted accounting principles,the financial statements of the component units have been included in the financial reporting entityas blended components.The City Council is the governing board for Laredo Municipal Housing Corporation, LaredoConvention and Visitors' Bureau, Laredo Transit Management, Inc and Laredo Public FacilitiesCorporation - La Terraza, LLC. These entities are bound by the City's legal requirements and theCity Council approves the budget, major contracts, surplus dispositions, and any fees or charges.Additionally, the City is legally responsible for debt and public service rendered within the City'sboundaries.Laredo Municipal Housing Corporation The Laredo Municipal Housing Corporation (LMHC) wasestablished in 1976 to acquire 74 duplexes from the Federal Government in an effort to alleviate theexisting housing shortage and provide affordable rental housing to the citizens of Laredo. Theseunits are known as the Jose A. Flores Apartments. In 1986 the LMHC had 64 additional rental unitsconstructed, known as the Tomas Flores Apartments. The 210 rental properties (82 two-bedroom,98 three-bedroom and 30 four-bedroom) must be maintained in a safe and habitable condition. Inaddition to the rental units, one duplex unit is being used as the Laredo Municipal HousingCorporation office. The Corporation provides the necessary materials and labor required for therepairs of each rental unit. Beautification efforts are also rendered with consistent grass and treetrimming and exterior painting of the duplexes. Staff also provides a physical inspection of rental35

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSunits and implements a preventive maintenance program to curtail deterioration of the units. TheLaredo Municipal Housing Corporation operations are reported as an enterprise fund.Laredo Transit Management, Inc. Under the authority of Revised Texas Civil Statues, Article118(z) on September 8, 1987, created Laredo Municipal Transit System, The Laredo MunicipalTransit System and “Mass Transit Board”. The Laredo Transit Management, Inc. reports to theMass Transit Board. L.M.T.S. is commonly referred to as El Metro.The primary function and purpose of Laredo Transit Management, Inc. is to operate, maintain,design, and construct a safe, reliable, cost effective and efficient public transportation system thatwill meet the changing needs of our community, while complying with applicable state and federalmandates, including the Texas Clean Air Act and the Americans with Disabilities Act.Laredo Transit Management, Inc. provides both a fixed-route and a demand response para-transitprogram (El Lift). Currently, the fixed-route system is comprised of 22 routes. The fixed routesystem has a total of 35 buses during a regular workday and 30 buses on a Saturday. The LaredoTransit Management, Inc. bus fleet is currently comprised of 47 buses and 2 trolleys. Thirty-sevenbuses operate using compressed natural gas. The El Lift program operates a total of 18 para-transitvans. Twelve are utilized for a regular workday. Laredo Transit Management, Inc. is reported as anenterprise fund.Laredo Convention and Visitors' Bureau The Laredo Convention and Visitors' Bureau wasestablished in April 1993 to engage in visitor promotion and to solicit and service conventions andother related group businesses generating overnight stays in the City, thereby enhancing anddeveloping the economy of the city. Laredo Convention and Visitors' Bureau operations are reportedas special revenue funds.Laredo Public Facilities Corporation - La Terraza, LLC. The Laredo Public Facilities Corporation(LPFC) - La Terraza, LLC was organized exclusively for the purpose of assisting the City infinancing, refinancing or provided public facilities. The LPFC has the power to finance theacquisition of City obligations issued or incurred in accordance with existing law, to provide for theacquisition, construction, rehabilitation, renovation, repair, equipping furnishing and placement inservice of public facilities including multifamily housing facilities. The LPFC is the sole GeneralPartner of the La Terraza at Lomas del Sur, Ltd. Partnership. The LPFC had no financial activity asof September 30, 2011 and therefore no financial information is disclosed.Laredo Firefighters' Retirement System The Laredo Firefighters' Retirement System was createdunder the authority of Article 6243e - Texas Local Firefighters' Retirement Act enacted by theLegislature of the State of Texas. The act established the membership, benefits, credits andadministration of certain retirement systems for volunteer or paid firefighters. The LaredoFirefighters' Retirement System administers the retirement system for the City of Laredo Firefightersemployees and is included in the financial statements of the City as a component unit.Complete financial statements of the component units can be obtained from the City of Laredo,Financial Services Department offices:36

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSB. Basis of AccountingCity of LaredoFinancial Services DepartmentP. O. Box 579Laredo, TX 78042-0579The accounting and reporting policies of the City as reflected in the accompanying basic financialstatements conform to generally accepted accounting principles (GAAP) for local governmentalunits as prescribed by the Governmental Accounting Standards Board and the American Institute ofCertified Public Accountants. The following represent the more significant accounting policies andpractices of the City.Government Wide and Fund Financial StatementsThe government-wide financial statements report information on all of the non-fiduciary activitiesof the primary government and its component units. The effect of inter-fund activity has beenremoved from these statements.Governmental activities, which normally are supported by taxes and intergovernmental revenues,are reported separately from business activities. Business-type activities rely to an extent on feesand charges for support. The primary government is reported separately for certain legally separatecomponent units for which the primary government is financially accountable.Program Revenues and Direct Expenses - The Statement of Activities demonstrates the directexpenses of a given function or segments offset by program revenues. A direct expense isspecifically associated with a service, program, or department and is clearly identifiable to aparticular function. In the Statement of Activities, certain indirect expenses are reported in theprogram expenses. Program revenue derives directly from the program itself or from parties outsidethe reporting government’s taxpayers or citizenry. Program revenues include charges to customersor applicants who purchase, use, or directly benefit from goods, services, or privileges provided by agiven City function or segment. Program revenues also include grants and contributions that arelimited to meeting the operational or capital requirements of a particular program. Taxes and otheritems not included among program revenue are reported as general revenue.Fund AccountingThe accounts of the City are organized on the basis of funds, each of which is considered to be aseparate accounting entity. The operations of each fund are accounted for with a separate set of selfbalancingaccounts that comprise its assets, liabilities, fund equity, revenues and expenditures orexpenses, as appropriate. Government resources are allocated to and accounted for in individualfunds based upon the purposes for which they are to be spent and the means by which spendingactivities are controlled. The City maintains the following fund types:Governmental Funds37

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSGovernmental funds are those through which most governmental functions of the City are financed.The acquisition, use and balances of the City's expendable financial resources and the related currentliabilities (except those, if any, which should be accounted for in proprietary funds) are accountedfor through governmental funds. The measurement focus is upon determination of financialposition and changes in financial position, rather than upon net income determination. The Citymaintains the following governmental fund types:General Fund - The General Fund is the general operating fund of the City. It is used to accountfor and report all financial resources not accounted for and reported in another fund.Special Revenue Funds - Special Revenue Funds are used to account for and report the proceeds ofspecific revenue sources that are restricted or committed to expenditures for specific purposes otherthan debt service or capital projects. Proceeds of specific revenue sources established that one ormore specific restricted or committed revenues should be the foundation for a special revenue fund.The restricted or committed proceeds of specific revenue sources should be expected to continue tocomprise a substantial portion of the inflows reported in the fund. Special revenue funds should notbe used to account for resources held in trust for individuals, private organizations or othergovernments.Debt Service Fund - The Debt Service Funds are used to account for and report financial resourcesthat are restricted, committed or assigned to expenditure for principal and interest.Capital Projects Funds - Capital Projects Funds are used to account for and report financialresources that are restricted, committed or assigned to expenditures for capital outlays, including theacquisition or construction of capital facilities and other capital assets. Capital projects fundsexclude those types of capital-related outflows finance by proprietary funds or for assets that will beheld in trust for individuals, private organizations or other governments.Proprietary FundsProprietary funds are used to account for the City's ongoing operations that are financed andoperated in a manner similar to private business enterprises - where the determination of net income,financial position, and cash flows are necessary or useful for sound financial administration. Goodsor services from such activities can be provided either to outside parties (enterprise funds) or toother departments or agencies primarily within the government (internal service funds).The City has adopted the following policy regarding proprietary activities under GASB StatementNumber 20, Accounting and Financial Reporting for Proprietary Funds and Other GovernmentalEntities That Use Proprietary Fund Accounting.Enterprise Funds – Enterprise Funds are used to account for operations that (1) are financed andoperated in a manner similar to private business enterprises where the intent of the City Council isthat the cost (expenses including depreciation) of providing goods or services to the general publicon a continuing basis be financed or recovered primarily through user charges or (2) where the CityCouncil has decided that periodic determination of revenues earned, expenses incurred, and netincome is appropriate for capital maintenance, public policy, management control, accountability, orother purposes.38

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSThe City will apply all GASB pronouncements and all FASB Statements and Interpretations,Accounting Principles Board (APB) Opinions and Accounting Research Bulletins (ARB) issued onor before November 30, 1989, unless they conflict with or contradict GASB pronouncements andapply all FASB Statements and Interpretations, issued after November 30, 1989, except those thatconflict with or contradict GASB pronouncements.Internal Service Funds - Internal Service Funds are used to account for the financing of goods orservices provided by one City department or agency to other City departments or agencies or toother governmental units on a cost-reimbursement basis.Fiduciary FundsFiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent forindividuals, private organizations, other governmental units, and other funds.Trust Funds - These funds are accounted for in the same manner as proprietary funds with themeasurement focus on determination of net income and capital maintenance. The City is custodianto funds contributed into the fund; funds are used toward annuity payments. The City has two trustfunds: Firefighters Retirement System, and City Annuity.Agency Fund - The Agency Fund is used to account for funds where the City’s role is purelycustodial. All assets reported in an agency fund are offset by a liability to the party on whose behalfthey are held and do not involve measurement of results of operations. Currently, the City has threeAgency fund: Payroll Clearing, Police Retirees Dependants, and Fire Retirees Dependant FundPermanent Funds – Permanent funds are only used to account for and report resources that arerestricted to the extent that only earnings and not principal may be used for purposes that support thereporting government’s programs for the benefit of the government or its citizenry.Measurement Focus, Basis of Accounting, and Financial Statement PresentationThe government-wide financial statements are reported using the economic resources measurementfocus and the accrual basis of accounting. Economic resources measurement focus reports allinflows, outflows, and balances affecting or reflecting an entity’s net assets. Accrual basisaccounting is the method that recognizes the financial effect of transactions, events, and inter-fundactivities when they occur, regardless of the timing of related cash flows. Property taxes arerecognized as revenues in the year for which they are levied while the organization recognizes grantrevenue as soon as all eligibility requirements obligatory have been met.Governmental fund financial statements are reported using the current financial resourcesmeasurement focus and the modified accrual basis of accounting. Revenues are recognized whenmeasurable and available. "Measurable" means that the amount of the transaction can bedetermined, and "available" means collectible within the current period or soon enough thereafter tobe used to pay liabilities of the current period. The City considers property tax revenues to beavailable if they are collected within 60 days of the end of the current fiscal period. Expendituresare generally recognized under the modified accrual basis of accounting when the related fund39

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSliability is incurred. An exception to this general rule is principal and interest on general long-termobligations, compensated absences, and claims and judgments which are recognized when due.Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are allconsidered to be susceptible to accrual and are recognized as revenues of the current fiscal period.Sales taxes collected and held by the state at year-end on behalf of the government are alsorecognized as revenue. All other revenue items are considered to be measurable and available whenthey are received.The City reports the following as major governmental funds:General Fund is the general operating fund of the City. It is used to account for and report allfinancial resources not accounted for and reported in another fund.Debt Service Fund is used to account for and report financial resources that are restricted,committed or assigned to expenditure for principal and interest.The City reports the following as major proprietary funds:Bridge System Fund is used to account for toll proceeds from four international bridges and therelated operations, maintenance, and debt service.Water Works System Fund is used to account for the operations, maintenance, and debt servicefrom three water treatment plants and seventeen booster stations and the related revenue receivedfrom 63,703 customers.Sewer System Fund is used to account for the operations, maintenance, and debt service of theCity’s five sewage treatment plants and its related revenue received from 59,955 customers.Additionally, government-wide reports for proprietary funds include the following fund type:Internal Service Funds are used to provide fleet services to other funds, provide services associatedwith the City’s partially self-funded health benefits program, provide services associated with therisk management for all city property including workman’s compensation, and providetelecommunication services to all funds on a cost-reimbursement basis.As a general rule, the effect of inter fund activity has been eliminated from the government-widefinancial statements. Exceptions to this general rule are payments-in-lieu of taxes and other chargesbetween the City’s water and sewer functions and various other functions of government.Private sector standards of accounting and financial reporting issued after November 30, 1989, arefollowed in both business-type activities and enterprise funds fund financial statements to the degreethat those standards do not conflict with or disagree with the guidance of the GovernmentalAccounting Standards Board. Governments have the option of following subsequent private-sectorguidance for their business-type activities and enterprise funds, subject to this same limitation. TheCity has elected to follow subsequent private-sector guidance.40

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSAmounts reported as program revenue include 1) charges to customers or applicants for goods,services, or privileges provided, 2) operating grants and contributions, and 3) capital grants andcontributions. Internally dedicated funds are reported as general revenues.Proprietary funds distinguish operating revenues and expenses from non-operating items. Operatingrevenues and expenses result from providing services and producing and delivering goods inconnection with a proprietary fund’s principal operations. The principal operating revenues of theenterprise funds and of the government’s internal service funds are charges to customers for salesand services. Operating expenses for enterprise funds and internal service funds include the cost ofsales and services, administrative expenses, and depreciation on capital assets. All revenues andexpenses not meeting this definition are reported as non-operating revenues and expenses.When both restricted and unrestricted resources are available for use, it is the government’s policyto use restricted resources first, and then unrestricted resources as they are needed.C. Budgets and Budgetary AccountingThe City adheres to the following procedures in establishing the operating budgets reflected in thebasic financial statements:(1) Sixty (60) days prior to the beginning of each fiscal year, the City Manager submits to the CityCouncil a proposed budget for the fiscal year beginning October 1st. This budget is required toinclude expenditures by office, department, and agency and the means of financing them. Proposedshort and long range capital expenditures and bonded debt requirements must also be included.(2) Public hearings are conducted at which all interested parties may comment concerning theproposed budget.(3) Council adopts the budget on or before the last day of the month of the fiscal year currentlyending through passage of an appropriation ordinance and tax levy ordinance. If the City Councilfails to adopt the budget at that time, the budget of the previous year is deemed to be adopted.(4) Annual appropriated budgets are legally adopted for the General Fund, Special Revenue Funds,Capital Project Funds, Debt Service Fund, Proprietary Funds, and certain Trust Funds. Annualbudgets for HUD Section 108 and Expendable Trust Fund are not legally adopted. A comparison ofbudget to actual is presented in the Basic Financial Statements for the General Fund.(5) The City Charter identifies various allowable amendments to the budget after adoption.Supplemental Appropriations are allowed if the City Manager certifies that there are, available forappropriation, revenues in excess of those estimated in the budget and Council by ordinance andafter a formal inquiry has established a need for the supplemental appropriation. EmergencyAppropriations are allowed to meet a public emergency affecting life, health, property, or the publicpeace of the City through an emergency ordinance if there are available un-appropriated revenues.Decreases in the amount of appropriations are allowed if revenues available are insufficient to meetthe amount appropriated.41

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSTransfer of Appropriations is allowed. Several supplementary appropriations were necessary duringthe year primarily to adjust the total budget for grants received from various federal and stateagencies.(6) The City Council approval is required in order to transfer un-appropriated balances from onedepartment, office, or agency to another. The City Manager has the authority, without City Councilapproval, to transfer appropriation balances from an expenditure account to another within adepartment, office, or agency of the City. The reported budgetary data has been revised foramendments authorized during the year.(7) Each appropriation, except those for capital expenditures, shall lapse at the close of the fiscalyear to the extent it has not been expended or encumbered. Certain differences exist between thebasis of accounting for budgetary purposes and that used for reporting in accordance with generallyaccepted accounting principles.D. EncumbrancesEncumbrances represent commitments related to unperformed (executed) contracts for goods orservices. Encumbrance accounting, under which purchase orders, contracts, and other commitmentsfor the expenditure of monies are recorded in order to reserve that portion of the applicableappropriation, is used in the governmental funds.Encumbrances outstanding at year-end are reported as reservations of fund balances since thecommitments will be honored during the subsequent year and, accordingly, do not constituteexpenditures or liabilities.For budgetary purposes, appropriations lapse at year-end except for that portion related toencumbered amounts. For financial purposes, the original budget also includes actual appropriationamounts automatically carried over from prior years to cover prior-year encumbrances.E. Equity in Investment PoolCash balances of all City funds (except for the Laredo Firefighters' Retirement System) are pooledand invested. The Equity in Investment Pool consists of cash in bank accounts, which are pooledand allocated to all funds. Investments purchased with pooled cash consisting of Investment Pools,U.S. Government obligations, U.S. Agency obligations, and Mortgage Backed Securities arerecorded at fair value in accordance with GASB Statement 31 - Accounting and Financial Reportingfor Certain Investments and for External Investment Pools and are classified as “Investments” in theaccompanying combined balance sheet. Interest earned on investments purchased with pooled cashis allocated monthly to each participating fund based upon the fund's average month equity balance.Funds that incur a negative balance in equity in pooled investments are reclassified as Due to OtherFunds in the financial statements and are not allocated any interest earnings or charged interestexpense.42

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSF. InvestmentsThe City can legally invest in certificates of deposit, repurchase agreements, obligations of the U.S.Government and its Agencies or instrumentality and State obligations all of which are recorded atfair value in accordance with GASB Statement 31 - Accounting and Financial Reporting for CertainInvestment and for External Investment Pools.G. InventoriesInventories are valued at cost, which approximates market, using the first-in first-out method, andthe average cost method as appropriate. The costs of governmental fund-type inventories arerecorded as expenditures when consumed rather than when purchased.H. Restricted AssetsThe International Toll Bridge System, Water System, and Sewer System revenue bond indenturesrequire that, during the period the bonds are outstanding, the City must maintain certain separateaccounts and funds to account for the proceeds from the issuance of the revenue bonds and the debtservice deposits made from revenues. These restricted assets can be used only in accordance withthe revenue bond indenture to pay the debt service payments on such bonds.I. Property, Plant, Equipment, and InfrastructureProperty, plant, and equipment owned by the City are stated at historical cost. Maintenance andrepairs are charged to operations as incurred, and improvements of $5,000 or more, which extendthe useful life of a capital asset, are capitalized. Currently, the City’s policy has a threshold of$5,000 for equipment and $25,000 for infrastructure. The straight-line method is used to calculatethe depreciation for all capital assets over the estimated useful life:Utility Funds:PlantTransmission and distribution systemOther machinery and equipmentAll Other Funds:Buildings and improvementsMachinery and equipmentVehiclesStreetsBridgesAirport runwaysBoat rampsStorm DrainageLandfill50 years25-50 years1 - 25 years45 years3 - 10 years6 years25 years25 years25 years25 years25 years25 yearsThe City’s Infrastructure acquired prior to June 30, 1980, is included. When property, plant, andequipment are retired from service or otherwise disposed of, a gain or loss on disposal of assets isrecognized.43

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSJ. Net AssetsNet assets represent the difference between assets and liabilities. Net assets invested in capitalassets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by theoutstanding balances of any borrowing used for the acquisition, construction or improvements ofthose assets, and adding back unspent proceeds. Net assets are reported as restricted when there arelimitations forced on their use either through enabling legislations adopted by the City or throughexternal restrictions imposed by creditors, grantors or regulations of other governments.K. Long-Term ObligationsThe City has issued combination tax and special revenue (water, sewer, paving assessments, hotelmotel,airport revenues, mass transit, parking system, and public property finance contractualobligations) certificates of obligation, which it intends to repay from a combination of revenues andproperty taxes. The City identifies the debt service requirements for all general obligation bondsand all combination tax and special revenue certificates of obligation and reduces the property taxlevy by surplus revenues (if any) from the above-mentioned sources. GASB Statement 34 eliminatesthe presentation of the General Long Term Debt Account Group, but provides that these records tobe maintained and incorporates the information into the Governmental column in the governmentwideStatement of Net Assets. General obligation and all combination tax and special revenuecertificate of obligation debt is recorded exclusively in the General Long Term Debt, and it iscounted towards the legal debt limit of the City.Any proceeds from issuance of general obligation and combination certificates of obligation, whichare used for construction of governmental capital assets are recorded as bond proceeds in thegovernmental funds.Any proceeds from issuance of combination of tax and special revenue certificates of obligationbonds which are to be used for construction of enterprise fund capital assets are recorded as bondproceeds in the General Fund and as contributions to the enterprise funds. In the enterprise fund theproceeds are recorded as “Contributions”.Revenue bonds, which have been issued to fund capital projects of an Enterprise Fund and SpecialRevenue Fund, are to be repaid from net revenues of the Enterprise Funds and Sales Venue SalesTax for the Special Revenue Fund. Such debt is recorded in the Enterprise Funds.L. Compensated AbsencesCity employees are granted vacation and sick leave hours at varying rates based on the number ofyears employed. Employees are paid accumulated vacation hours up to a maximum of 480 hoursupon termination or retirement. Sick leave hours are paid up to a maximum of 720 hours uponretirement.Amounts of vested or accumulated vacation leave that are not expected to be liquidated withavailable financial resources are accounted as a general long-term debt for internal purposes only.Accumulated vacation leave of enterprise funds are recorded as an expense and liability of those44

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSfunds as the benefits accrue to employees. No liability is recorded for non-vesting accumulatingrights to receive sick pay benefits except as noted above.M. Federal and State Grants and EntitlementsGrants and entitlements may be accounted for within any of the three fund types. The purpose andrequirements of each grant or entitlement are carefully analyzed to determine the proper fund type inwhich to record the related transactions. Grants and entitlements received for purposes normallyfinanced through a particular fund type may be accounted for in that fund type provided thatapplicable legal restrictions can be appropriately satisfied.Capital grants restricted for capital acquisitions or construction projects are accounted for in theapplicable Capital Project Funds. Revenues received for operating or for capital expenditurepurposes of Enterprise Funds are recognized in the applicable Enterprise Fund.In prior years, capital contributions, including capital grants received for capital purchases, wererecorded as a direct addition to the contributed capital equity account for Proprietary Funds.Beginning in fiscal year 2001, GASB 33 requires contributions of capital grants to be recorded asrevenue in the Statement of Revenue, Expense, and Changes for Fund Net Assets for ProprietaryFunds.N. Interfund TransactionsTransactions between funds that would be treated as revenues, expenditures, or expenses if theyinvolved organizations external to the governmental unit are accounted for as revenues,expenditures, or expenses in the funds involved.Non-recurring or non-routine transfers of equity between funds are reported as additions to ordeductions from the fund balance of governmental funds. All other legally authorized transfers aretreated as transfers in the basic financial statements and are included in the results of operations ofboth governmental and proprietary funds.O. Unamortized Bond Issuance CostsExpenses related to the sale of revenue bonds are amortized over the life of the issue.P. Statement of Cash FlowsFor purposes of the statements of cash flows, cash and cash equivalents include cash on hand, equityin the investment pool, and cash with fiscal agent. Governmental entities under GASB 9, asamended by GASB 34, paragraph 105, must use the direct method for Cash Flow presentation.Q. Fund EquityThe City adopted GASB Statement No. 54 “Fund Balance Reporting and Governmental Fund TypeDefinitions effective October 1, 2010. Fund balances are classified as nonspendable, restricted,committed, assigned or unassigned in governmental funds. Nonspendable fund balance cannot bespent because of legal or contractual requirements. Restricted fund balances have restrictions for45

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSspecific purposes which are either imposed externally or by enabling legislation. Committed fundbalances can only be used for specific purposes pursuant to constraints imposed by City Councilthrough ordinance or resolution. Assigned fund balances are constrained by intent made by Citymanagement. Unassigned fund balances include residual positive balance within General Fund ormay also include negative balances for any governmental fund type.The City, as per City Charter of the City of Laredo, has set aside 15% of expenditures of the GeneralFund as a cash reserves or minimum fund balance. If at any time the reserves fall below thisthreshold, City management will develop a plan, approved by the City Council, to restore the fundbalance reserves to 15% of expenditures.Proprietary funds have three classifications of fund equity: 1) net assets invested in capital assets,net of related debt; 2) restricted net assets; and 3) unrestricted net assets.NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIALSTATEMENTSA. Explanation of certain differences between the governmental fund balance sheet and thegovernment-wide statement of net assetsThe governmental fund balance sheet includes reconciliation between fund balance-totalgovernmental funds and net assets-governmental activities as reported in the government-widestatement of net assets. One element of that reconciliation explains that “long–term liabilitiesinclude bonds payable, which are not due and payable in the current period and therefore are notreported in the funds.” The details of this $285,516,857 difference are as follows:Bonds, notes payable, and capital leases $ 236,009,880Accrued interest 1,244,803Deferred revenue (27,609,813)Compensated absences 23,343,701Elimination of Interfund activity (2,940,112)Net Pension Obligations 55,468,398Net adjustment to reduce fund balance-total governmentalfunds to arrive at net assets-governmental activities $ 285,516,857B. Explanation of certain differences between governmental fund statement of revenues,expenditures, and changes in fund balances and the government-wide statements of activities46

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSAn element of the reconciliation states that “the issuance of long-term debt provides currentfinancial resources to governmental funds, while the repayment of the principal of long-term debtconsumes the current financial resources of governmental funds. Neither transaction, however, hasany effect on net assets. Also, governmental funds report the effect of issuance costs, premiums,discounts, and similar items when debt is first issued, whereas these amounts are deferred andamortized in the statement of activities.” The details of this minus $10,432,434 difference are asfollows:Debt issued:Bond & Capital lease proceeds $ (23,996,731)Repayments:Bond & Notes payments 12,994,288Capital lease 570,009Net adjustment to decrease net changes in fundbalances-total governmental funds to arrive atchanges in net assets of governmental activities $ (10,432,434)An element of the reconciliation states that for governmental funds, capital outlay should bereported as expenditures. In the statement of activities, “the cost of these assets is allocated overtheir estimated useful lives and reported as depreciation expense.” The amount of capital outlaysexceeding depreciation in this fiscal year were $59,956,857. The details of this are as follows:Assets that were purchased and capitalized in the current year $ 90,281,034Assets that were disposed during the current fiscal year (2,479,394)Current year depreciation (27,844,783)Amount by which capital outlays exceed depreciation $ 59,956,857NOTE 3 - FUND DEFICITSThe following is a list of the unassigned deficit fund balances in the Special Revenue Funds:Veterans Field $38,241 and Laredo Energy Arena $87,500. The deficit for the Veterans Field is dueas a result of operations of the Veterans Field Fund. The deficit for the Laredo Energy Arena is dueto a nonspendable fund balance for inventory of $67,658 and the result of operations for the fund.The deficit will be covered by revenues received next fiscal year from events.NOTE 4 - CASH AND CASH EQUIVALENTSThe monetary assets of the City are held in various forms and accounts. These assets are describedand presented in the basic financial statements in three groups. One group is described as "Cash andCash Equivalents". This group is characterized as having high liquidity with little market risk andincludes cash in bank accounts, petty cash and change funds. Another group is disclosed as Equityin Investment Pool and consists of cash in bank accounts. The third group of monetary assets ispresented in the basic financial statements as "Investments". Cash balances of all City funds (exceptfor the Laredo Firefighters Retirement System) are pooled and invested. All securities are reportedat fair value in order to comply with GASB Statement 31 - Accounting and Financial Reporting forExternal Investment Pools. Investments with a remaining maturity at the time of purchase of one47

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSyear of less are reported at amortized cost. The net decrease in the fair value of the securities was$902,098 for the Laredo Firefighters Retirement System.As of September 30, 2011, cash and cash equivalents consisted of the following:Petty Cash and Change Fund $ 67,880Cash in Other Bank Accounts 17,482Cash with Fiscal Agent 618,064$ 703,426Custodial credit risk - deposits. In the case of deposits, this is the risk that in the event of a bankfailure, the City’s deposits may not be returned to it. The City’s deposit policy is in compliancewith Texas Government Code Chapter 2257 – “Collateral for Public Funds”. All deposits werecovered by federal depository insurance up to $100,000 and collateralized with eligible securities inamounts of at least 102% of the book value of deposits. As of September 30, 2011, the book valueof all the City’s deposits was $703,426. Deposits were properly secured at all times during the fiscalyear. All collateral securities were held by a third party in the City’s name and were not exposed tocustodial credit risk.NOTE 5 - INVESTMENTSThe City, as per the “Public Funds Investment Act” of the State of Texas, is authorized to invest inobligations of the United States or its agencies and instrumentalities; direct obligations of the Stateof Texas or its agencies and instrumentalities; other obligations which are unconditionallyguaranteed by the State of Texas or United States; obligations of the States, agencies thereof,Counties, Cities, and other political subdivisions of any state having been rated as investmentquality by a nationally recognized investment rating firm; Certificates of Deposits of state andnational banks domiciled in Texas, guaranteed or insured by the Federal Depository Insurance or itssuccessor; fully collateralized direct repurchase agreements with a defined termination date securedby obligations of the United States or its agencies; Banker’s Acceptances that has a stated maturityof 270 days or less from the date of issuance; Commercial Paper that has a stated maturity of 270days or less from date of issuance and rated not less than A-1 or P-1 or an equivalent rating; a noloadmoney market mutual fund that is registered with and regulated by the Securities and ExchangeCommission, has a dollar-weighted average stated maturity of 90 days or fewer and includes in itsinvestment objectives the maintenance of a stable net asset value of $1 for each share; InvestmentPools as long as the governing body of the City approved them by rule, order ordinance orresolution. The investments of the Pension Trust Fund, the Laredo Firefighters’ Retirement System,are governed by the Texas Local Fire Fighters’ Retirement Act, which established the System. Theact authorizes additional investment types which include corporate bonds, common stock andmutual funds.The investment and maturities at September 30, 2011, were as follows:48

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSNon Maturity Investment Maturity in YearsFair Value Rated Less Than 1 1-3Mutual Funds $ 32,303,611 32,303,611 - -Equities 37,588,427 37,588,427 - -Managed Pools 416,286,377 123,771,424 262,631,453 29,883,500Total Investments $ 486,178,415 193,663,462 262,631,453 29,883,500Interest Rate Risk. Interest rate risk is the risk that the value of investments will decrease as a resultof a rise in interest rates. The City’s investment policy limits the maximum maturities exceedingtwo years to 25% of the total portfolio. The other 75% must, to the extent possible, be matchedwith projected cash flow requirements. As of September 30, 2011, all investments had averagematurity dates of less than one year.Credit Risk. Credit risk is the risk that the government will not be able to recover the value of itssecurities. As per the City’s investment policy, all security dealers must be registered and certifiedwith the Texas State Securities Board, National Association of Security Dealers, and Securities andExchange Commission. It is the policy of the City to require full collateralization of all City fundson deposits with a depository bank. The City’s policy states that all purchased securities shall beheld in safekeeping by either the City, the City’s account in a third-party financial institution, or theCity’s safekeeping account at its designated depository bank.As of September 30, 2011, the City invested in Bank Certificates of Deposit and Managed Pools.The credit ratings for our Managed Pool accounts are as follows: TexPool “AAAm”, andTexasDaily “AAAm”.The Laredo Firefighters’ Retirement System, as per their investment policy, is allowed to invest inother types of investments such as mutual funds and common stock.Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to themagnitude of a government’s investment in a single issuer. As per the City’s investment policy, nomore than 50% of the City’s total investment portfolio will be invested in a single security type,with the exception of U.S. Treasury securities. Of the City’s total investments, 100% were investedin Local Government Investment Pools and Bank Certificates of Deposit. Of the Firefighters’Retirement System investments, 55% was invested in mutual funds and 45% in equities.Custodial Credit Risk. For an investment security, custodial credit risk is the risk that in the eventof a failure of the counterparty the City will not be able to recover the value of its investments orcollateral securities that are in the possession of an outside party. As of September 30, 2011, theCity had no repurchase agreements. The City’s investment policy dictates that a third party financialinstitution, designated by the City, shall be the holder of the City’s investment securities. TheFirefighters’ Retirement System has also designated a third party selected by the system as thesafekeeping institution for its securities.49

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSNOTE 6 - RECEIVABLESThe City's property tax is levied each October 1 st on the assessed value listed on the tax roll as of theprior January 1st for all real and personal property located in the City. The City Charter stipulatesthat taxes shall become due on October 1 st of the year of levy and shall be paid by the followingJanuary 31 st . All real and personal property in the City on January 1 st each year will be subject tolien from that date for taxes due thereon. The adjusted assessed value for the tax roll as of January 1,2010, upon which the 2010 levy was based, was $10,634,156,096.The appraisal of property within the City is the responsibility of the Webb County AppraisalDistrict. The Appraisal District is required under the Property Tax Code to assess all propertywithin the Appraisal District on the basis of 100% of its market value. The value of property withinthe Appraisal District must be reviewed every three years; however, the City may, at its ownexpense, require more frequent reviews of appraised value. The Webb County Appraisal Districthas chosen to review the value of property every year. Under this legislation, the City continues toset tax rates on property within the City limits. However, if the effective tax rate exceeds the ratefor the previous year by more than 8% qualified voters of the City may petition for an election todetermine whether to limit the tax rate to no more than 8% above the effective tax rate of theprevious year.The City is permitted by Article II, Section 5 of the State of Texas Constitution to levy taxes up to$2.50 per $100 of assessed valuation for general governmental services; including the payment ofprincipal and interest on general obligation long-term debt. Under the 1981 City Charter, the City'spower of taxation is restricted to State statutes. The City Council has considered $1.50 as themaximum tax per $100 assessed valuation.The tax rate to finance general governmental services including the payment and interest on longtermdebt for the year ended September 30, 2011 was $.637000 per $100 of assessed valuation($.512304 for general government and $.124696 for debt service). Thus, the City has a tax marginof approximately $.863000 per $100, and could levy approximately $91,772,767 in additional taxesper year from the present assessed valuation of $10,634,156,096 before the limit is reached. Becauseof limitations imposed by state law, cases in which accumulated taxes exceed property value, otherproblems in tax collection and because of the possible uncollectibility of certain other accountsreceivable, allowances have been provided for uncollectible accounts resulting in only the netcollectible amounts being reflected in the balance sheet.The allowances for uncollectible accounts for taxes and other receivables as of September 30, 2011are reflected in the following table:50

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSOtherGovernmentalGeneral Types Proprietary Fiduciary TotalReceivables:Property Taxes $ 8,230,095 1,225,262 - - 9,455,357Hotel/Motel Taxes - 53,208 - - 53,208Accounts 21,939,325 7,611,296 12,651,103 31,809 42,233,533Notes - 16,073,584 661,418 - 16,735,002Paving Assessments - 205,376 - - 205,376Gross Receivables 30,169,420 25,168,726 13,312,521 31,809 68,682,476Less Allowance ForUncollectible (18,882,283) (7,351,635) (2,870,255) - (29,104,173)Net Receivables $ 11,287,137 17,817,091 10,442,266 31,809 39,578,303NOTE 7 - RESTRICTED ASSETS FOR ENTERPRISE FUND TYPESCertain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for theirrepayment, are classified as restricted assets on the balance sheet because their use is limited byapplicable bond covenants.The "revenue bond retirement reserve" is used to report resources set aside to make up potentialfuture deficiencies in the revenue bond current debt service account. The "revenue bondcontingency" is used to report resources set aside to subsidize potential deficiencies from theenterprise fund's operation that could adversely affect debt service payments. The "constructionaccount" is used to report those proceeds of bond issuance that are restricted for use in construction.The "water rights" account is used to report revenue received through water availability charges.The following table summarizes restricted assets by purpose as of September 30, 2011:OtherEnterprise Bridge Waterworks SewerFund System System System TotalRevenue Bond Retirement Reserve $ - 4,292,178 6,236,122 1,568,062 12,096,362Revenue Bond Contingency - 500,000 1,812,626 1,385,803 3,698,429Construction Account 11,129,901 132,855 96,818,448 23,122,196 131,203,400Water Rights - - 6,415,995 - 6,415,995Total Restricted Assets $ 11,129,901 4,925,033 111,283,191 26,076,061 153,414,186NOTE 8 – CAPITAL ASSETSCapital asset activity for the year ended September 30, 2011 was as follows:51

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSA – Governmental Activities:Balance as ofBalance as ofSeptember 30, Deletions September 30,2010 Additions and Transfers 2011Capital Assets, Not Being Depreciated:Land $ 70,500,680 8,283,116 (2,317,356) 76,466,440Construction in Progress 5,266,211 18,911,080 (4,366,888) 19,810,403Total Capital Assets, Not Being Depreciated 75,766,891 27,194,196 (6,684,244) 96,276,843Capital Assets Being DepreciatedBuildings 148,755,547 11,264,916 1,873,337 161,893,800Improvements Other Than Buildings 483,021,096 46,042,218 1,355,096 530,418,410Machinery and Equipment 89,151,249 6,082,754 (2,832,278) 92,401,725Total Assets Being Depreciated 720,927,892 63,389,888 396,155 784,713,935Less Accumulated Depreciation For:Buildings (34,491,020) (3,416,703) 722,252 (37,185,471)Improvements Other Than Buildings (190,991,078) (16,127,047) - (207,118,125)Machinery and Equipment (57,340,348) (8,494,845) 3,015,045 (62,820,148)Total Accumulated Depreciation (282,822,446) (28,038,595) 3,737,297 (307,123,744)Total Capital Assets, Being Depreciated, Net 438,105,446 35,351,293 4,133,452 477,590,191Governmental Activities Capital Assets, Net $ 513,872,337 62,545,489 (2,550,792) 573,867,034B - Business Type Activities:Balance as ofBalance as ofSeptember 30, Deletions September 30,Capital Assets, Not Being Depreciated:2010 Additions and Transfers 2011Land $ 31,180,460 48,599 - 31,229,059Construction in Progress 66,962,317 36,579,759 (19,919,191) 83,622,885Waterrights 29,847,150 10,203,673 - 40,050,823Total Capital Assets, Not Being Depreciated 127,989,927 46,832,031 (19,919,191) 154,902,767Capital Assets Being Depreciated:Buildings 96,084,536 - 7,898,751 103,983,287Improvements Other Than Buildings353,237,984 2,523,328 11,915,697 367,677,009Machinery and Equipment 71,703,748 9,681,829 (1,060,844) 80,324,733Total Assets Being Depreciated 521,026,268 12,205,157 18,753,604 551,985,029Less Accumulated Depreciation For:Buildings (24,194,444) (2,205,777) 74,554 (26,325,667)Improvements Other Than Buildings(146,039,715) (13,089,910) - (159,129,625)Machinery and Equipment (50,174,151) (6,812,283) 1,059,054 (55,927,380)Total Accumulated Depreciation (220,408,310) (22,107,970) 1,059,054 (241,382,672)Total Capital Assets, Being Depreciated, Net 300,617,958 (9,902,813) 19,812,658 310,602,357Business Type Activities Capital Assets, Net $ 428,607,885 36,929,218 (106,533) 465,505,124Depreciation expense was charged to functions/program of the primary government as follows:52

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSGovernment Activities:General Government $ 952,318Public Health 1,296,293Culture and Recreational 621,834Public Works 18,805,984Public Safety 2,503,274Air Transportation 3,665,080Capital assets held by the government’s internal service funds arecharged to the various functions based on their usage of the assets 193,812Total depreciation expense-governmental activities $ 28,038,595Business-Type Activities:Solid Waste Management 2,196,316Municipal Transit System 2,254,232Bridge System 4,192,722Waterworks System 7,260,095Sewer System 6,095,297Other Enterprise Funds 109,308Total depreciation expense-business-type activities $ 22,107,970NOTE 9 - RETIREMENT PLANSThe City provides benefits for all of its full-time employees (except for firefighters) through a nontraditional,joint contributory, hybrid defined benefit plan in the state-wide Texas MunicipalRetirement System (TMRS), one of 827 administered by TMRS, an agent multiple-employer publicemployee retirement system.Benefits depend upon the sum of the employee's contributions to the plan, with interest, and theCity-financed monetary credits, with interest. At the date the plan began, the City granted monetarycredits for services rendered before the plan began using a theoretical amount equal to two timeswhat would have been contributed by the employee, with interest, prior to establishment of the plan.Monetary credits for service since the plan began are a percentage (100%, 150%, or 200%) of theemployee's accumulated contributions. In addition, the City can grant, as often as annually,another type of monetary credit referred to as an updated service credit which is a theoreticalamount which, when added to the employee's accumulated contributions and the monetary creditsfor service since the plan began, would be the total monetary credits and employee contributionsaccumulated with interest if the current employee contribution rate and City matching percent hadalways been in existence and if the employee's salary had always been the average of his salary inthe last three years that are one year before the effective date. At retirement, the benefit is calculatedas if the sum of the employee's accumulated contributions with interest and the employer-financedmonetary credits with interest were used to purchase an annuity.Deposit Rate: 7%Matching Ratio (City to Employee) 2 to 1A member is vested after5 years53

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSMembers can retire at certain ages, based on the years of service with the City.The Service Retirement Eligibilities for the city are: 5 yrs/age 60, 20 yrs/any age.Under the state law governing TMRS, the actuary annually determines the City contribution rate.This rate consists of the normal cost contribution rate and the prior service contribution rate, both ofwhich are calculated to be a level percent of payroll from year to year. The normal cost contributionrate finances the currently accruing monetary credits due to the City matching percent, which are theobligation of the City as of an employee's retirement date, not at the time the employee'scontributions are made. The normal cost contribution rate is the actuarially determined percent ofpayroll necessary to satisfy the obligation of the City to each employee at the time his/her retirementbecomes effective. The prior service contribution rate amortizes the unfunded (over-funded)actuarial liability (asset) over the remainder of the plan's 25-year amortization period. The unitcredit actuarial cost method is used for determining the City contribution rate. Both the employeesand the City make contributions monthly. Since the City needs to know its contribution rate inadvance for budgetary purposes, there is a one-year delay between the actuarial valuation that is thebasis for the rate and the calendar year when the rate goes into effect. (i.e. December 31, 2010valuation is effective for rates beginning January 2012).SCHEDULE OF ACTUARIAL LIABILITIES AND FUNDING PROGRESSActuarial Valuation Date 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10Actuarial Value of Assets $ 93,220,964 104,886,750 118,216,115 131,250,617 147,642,107 166,772,840 227,498,651Actuarial Accrued Liability 159,858,885 176,834,192 196,473,335 255,908,643 275,809,704 305,212,249 363,711,044Percentage Funded 58.31% 59.31% 60.17% 51.29% 53.5% 54.6% 62.5%Unfunded ActuarialAccrued Liability (UAAL) 66,637,921 71,947,442 78,257,220 124,658,026 128,167,597 138,439,409 136,212,393Annual Covered Payroll 59,429,800 66,500,972 70,411,134 76,207,380 83,778,815 86,683,788 84,075,541UAAL as a percentage ofcovered Payroll 112.13% 108.19% 111.14% 163.58% 153.0% 159.7% 162.0%Annual Pension Cost:Annual RequiredContribution (ARC) 9,637,803 10,609,392 11,593,062 12,670,264 13,625,648 14,436,262 16,239,405Less Contributions Madeat the end of the period 9,637,803 10,609,392 11,593,062 12,670,264 13,625,648 14,436,262 16,239,405Net Pension Obligation $ - - - - - - - -54

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSActuarial Assumptions0B0BActuarial Cost Method -Projected Unit CreditAmortization Method-Level Percent of PayrollRemaining Amortization Period- 27 Years – Closed PeriodAsset Valuation Method-10-year smoothed marketInvestment Rate of Return- 7.0%Projected Salary IncreasesVaries by Age and ServiceIncludes Inflation At 3.0%Cost-of-Living Adjustments- 2.1%The City of Laredo is one of 827 municipalities having the benefit plan administered by TMRS.Each of the 827 municipalities has an annual, individual actuarial valuation performed. Allassumptions of the December 31, 2010 valuations are contained in the 2010 TMRS ComprehensiveAnnual Financial Report, a copy of which may be obtained by writing to P. O. Box 149153, AustinTX 78714-9153.Laredo Firefighters' Retirement System Required Supplemental InformationDisclosures in Accordance with GASB Statement No. 25 & 27Actuarial Update as of March 31, 2010The Financial Statements are reported using the current financial resources measurement focus andthe modified accrual basis of accounting.The Board of Trustees of the Laredo Firefighters Retirement System is the administrator of a singleemployerdefined benefit pension plan. The Laredo FirefightersRetirement System is considered part of the City of Laredo financial reporting entity and is includedin the City’s financial reports as a pension trust fund.The Laredo Firefighters Retirement System covers the firefighters in the Laredo Fire Department.The table below summarizes the membership of the System reflected in the actuarial valuation as ofMarch 31, 2010, which is performed every two years.03/31/10a. Retirees and beneficiaries currently receiving benefits and terminatedemployees entitled to benefits but not yet receiving them109b. Current Employees:i. Vested 74ii. Non-vested 268c. Total 451The Laredo Firefighters Retirement System provides service retirement, death, disability, andwithdrawal benefits. These benefits vest after 20 years of credited service. Employees may retire atage 50 with 20 years of service. The Plan effective July 20, 2011 (in effect on the March 31, 2010valuation date) provides a monthly normal service retirement benefit, payable in a Joint and Two-Thirds to Spouse form of annuity. The monthly benefit is equal to 3.03% of Final Average MonthlySalary for each year of service.55

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSThere is no provision for automatic post retirement benefit increases. The System has the authorityto provide, and has periodically in the past provided for, ad hoc post retirement benefit increases.The Texas Local Fire Fighters’ Retirement Act (TLFFRA) authorizes the benefit provisions of thisplan. TLFFRA provides the authority and procedure to amend benefit provisions.Contributions Required and Contributions MadeThe contribution provisions of this plan are authorized by TLFFRA. TLFFRA provides theauthority and procedure to change the amount of contributions determined as a percentage of pay byeach firefighter and a percentage of payroll by the city. While the contribution requirements are notactuarially determined, state law requires that each plan of benefits adopted by the System must beapproved by an eligible actuary. The actuary certifies that the contribution commitment by thefirefighters and the City provides an adequate financing arrangement. Using the entry age actuarialcost method the plan's normal cost contribution rate is determined as a percentage of payroll. Theexcess of the total contribution rate over the normal cost contributions rate is used to amortize theplan's unfunded actuarial accrued liability, and the number of years needed to amortize the plan'sunfunded actuarial accrued liability is determined using an open, level percentage of payroll method.The costs of administering the plan are financed from the trust. For the Plan effective July 20,2011,(Plan effective March 31, 2010), the funding policy of the Laredo Firefighters Retirement Systemrequires contributions equal to 14% of pay by the firefighters. On October 1, 2010, the citycontribution rate was 17.65% of pay for all firefighters. The revised actuarial valuation as of May31, 2010 reflected the scheduled increases in the city contribution rate from 17.65% to 17.90% inJune 2011, to 18.15% in October 2012, to the ultimate rate of 20.10% in October 2013, andassumed the 20.10% rate will continue at least for the remainder of the UAAL amortization period.Annual Pension CostFor the fiscal year ending September 30, 2011, the City of Laredo's annual pension cost of$4,644,823 for the Laredo Firefighters Retirement System was equal to the City's required andactual contributions during the year. While the required contributions were not actuariallydetermined but were a fixed percentage, the plan benefits which was most recently amendedeffective as of July 20,2011 has been approved by the Board's actuary as having an adequatefinancing arrangement. On October 1, 2010, the city contribution rate was 17.65% of pay for allfirefighters, and it increased to 17.90% effective June 2011 for the remainder of the fiscal yearaccording to the current collective bargaining agreement. The required contributions were reflectedin the March 31, 2010 actuarial valuation, which satisfied the parameters of the GovernmentalAccounting Standards Board (GASB) Statement No. 27.The entry age actuarial cost method was used, with the normal cost calculated as a level percentageof payroll. The actuarial value is equal to the expected actuarial value of assets adjusted by 40% ofthe difference between the actual market value and the expected actuarial value. The actuarial valueis not more than 110% or less than 90% of the actual market value of assets. The actuarialassumptions included an investment return assumption of 8.0% per year (net of expenses), projectedsalary increases averaging 3.75% per year as a general salary increase and a range from 0% to 7%per year as a promotion and longevity increase based on 30-year career, and no postretirement costof-livingadjustments. An inflation assumption of 3.75% per year is included in the investmentreturn and salary increase assumptions. The unfunded actuarial accrued liability (UAAL) is56

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSamortized with the excess of the total contribution rate over the normal cost rate. The number ofyears needed to amortize the UAAL is determined using an open, level percentage of payrollmethod; assuming that the payroll will increase 3.75% per year, and was 22 years as of March 31,2010 actuarial valuation based on the plan provisions effective July 20, 2011.Trend InformationAnnual Pension Percentage of APC Net PensionFiscal Year Ending Cost (APC) Contributed Obligation9/30/2002 $ 2,000,411 100% -9/30/2003 2,420,048 100% -9/30/2004 2,787,027 100% -9/30/2005 3,235,074 100% -9/30/2006 3,576,070 100% -9/30/2007 3,779,090 100% -9/30/2008 4,136,418 100% -9/30/2009 4,392,773 100% -9/30/2010 4,616,573 100% -9/30/2011 $ 4,644,823 100% -Schedule of Funding ProgressEntry AgeUAAL as aActuarial Unfunded PercentageActuarial Actuarial Accrued AAL Funded Annual of CoveredValuation Value of Liability (UAAL) Ratio Covered PayrollDate Assets (a) (AAL) (b) (b-a) (a/b) Payroll ( c ) (b-a)/c)09/30/95 $ 19,843,996 27,545,436 7,701,440 72.04% 6,832,917 113%07/31/96 21,565,365 30,936,694 9,371,329 69.71% 8,063,403 116%09/30/97 23,768,183 32,196,210 8,428,027 73.82% 8,080,170 104%06/30/98 27,925,724 38,685,191 10,759,467 72.19% 10,191,336 106%03/31/00 32,040,945 48,944,733 16,903,788 65.50% 12,481,680 135%03/31/02 35,064,847 66,941,016 31,876,169 52.40% 16,652,165 191%03/31/04 43,720,097 82,210,204 38,490,107 53.18% 18,726,396 206%03/31/06 57,228,050 95,649,924 38,421,874 59.80% 21,831,766 176%03/31/08 73,106,502 113,301,606 40,195,104 64.50% 22,931,569 175%03/31/10 $ 84,625,644 140,669,842 56,044,198 60.20% 25,715,241 218%Schedule of Employer Contributions57

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSAnnual Contribution As Annual Required Percentage of RequiredPlan Year Ended a Percentage of Payroll Contribution ContributionContributed9/30/2001 14.02% & 12.57% 1,714,980 100%9/30/2002 15.02% & 13.57% 2,000,411 100%9/30/2003 16.02% & 14.57% 2,420,048 100%9/30/2004 17.02% & 15.57% 2,787,027 100%9/30/2005 17.65% & 16.20% 3,235,074 100%9/30/2006 17.65% & 16.20% 3,576,070 100%9/30/2007 17.65% & 16.20% 3,779,090 100%9/30/2008 17.65% & 16.20% 4,136,418 100%9/30/2009 17.65% & 16.20% 4,392,773 100%9/30/2010 17.65% 4,616,573 100%A copy of the financial and pension plan report may be obtained by writing to: Laredo FirefightersRetirement System, 5219 Tesoro Plaza, Laredo, TX 78041.2B2BNOTE 10 - POST EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITSPlan Description:Police and City Employees who have twenty years of service or have attained age sixty with fiveyears of service and Firefighters who have attained age forty-five with twenty years of service prhave attained age fifty with twenty years of service with the City of Laredo are eligible for a serviceor early retirement, or qualified for a disability retirement under the Texas Municipal RetirementSystem, or the Fireman’s Relief and Retirement Fund, may continue coverage in the City of LaredoMedical Plan as a retiree, at the time service terminate with the City of Laredo. An eligibleemployee may elect coverage for his or her dependants.The widow/widower of a retiree who has coverage as a retiree under the City of Laredo MedicalPlan may continue coverage as a retiree.Currently, 166 retirees meet those eligibility requirements. The City reimburses 80% of the amountof validated claims for medical and hospitalization costs incurred by pre-Medicare retirees and theirdependants. Expenditures for postretirement health care benefits are recognized as retirees reportclaims and include a provision for estimated claims incurred but not yet reported to the City.Prior to age 65, retirees participate in the City’s Medical Plan. At age 65, retirees are offered aMedicare Supplemental Plan (Hartford Life), but the full cost is borne by the retirees. Howeverretirees can continue to participant in the City’s prescription drug program after age 65. There is a$750-$1,000 deductible per person with an additional maximum out of pocket cost of $2,500. Theprescription co-pay is $10 for generic and $35 for brand name prescriptions and $55 for preferredbrand.The Police and Firefighters are provided with a $2,000 life insurance policy at retirement.58

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSFunding Policy:During the year, expenditures of approximately $991,970 were recognized for postretirement healthbenefits of which $129,615 was received from the firemen’s as a contribution. The city’s annualOPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEBobligation for FY 2011 and the two preceding years were as follows:Percentage ofFiscal Year Annual Annual OPEB Net OPEBEnded OPEB Cost Cost Contributed Obligation9/30/2009 694,653 100% -9/30/2010 784,054 100% -9/30/2011 991,970 100% -Annual contribution rates for retirees not currently eligible for Medicare:Retiree Only Retiree & Spouse Retiree & FamilyPolice & Fire $0 $2,279 $4,491City Employees $2,848 $6,990 $6,990Annual contribution rates for retirees who are eligible for Medicare coverage (these contributionsare for prescription drug only-other medical benefits not available through the City’s Medical Plan):Retiree Only Retiree & Spouse Retiree & FamilyPolice & Fire $532 $1,464 N/ACity Employees $532 $1,464 N/AThe City is required to contribute at a rate that is based on an actuarial valuation that is prepared inaccordance within certain parameters. The following table shows the annual OPEB cost and netOPEB Obligation for the prior 4 years assuming the plan is not pre-funded (4% discount) FinancialStatement Disclosures Current Plan (with four year trend):59

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSFiscal Year Ending September 302008 2009 2010 2011Determination of Annual RequiredContributionNormal Cost at year end $ 6,078,256 $ 7,640,484 $ 7,640,484 $ 7,002,272amortization of UAAL & Loss 5,095,242 5,742,270 7,593,736 6,700,930Annual Required Contribution (ARC) 11,173,498 13,382,754 15,234,220 13,703,202Determination of Net OPEB ObligationAnnual Required Contribution $ 11,173,498 $ 13,382,754 $ 15,234,220 $ 13,703,202Interest on prior year Net OPEB Obligation 422,048 830,235 1,283,406 1,788,307Adjustment to AC (586,709) (1,175,100) (1,851,466) (2,579,846)Annual OPEB Cost 11,008,837 13,037,889 14,666,160 12,911,663Contributions made (804,172) (1,708,615) (2,043,632) (2,150,933)Estimated Increase in Net OPEB Obligation 10,204,665 11,329,274 12,622,528 10,760,730Net OPEB Obligation- beginning of year $ 10,551,201 $ 20,755,866 $ 32,085,140 $ 44,707,668Estimated Net OPEB Obligation- end of year $ 20,755,866 $ 32,085,140 $ 44,707,668 $ 55,468,398Funded Status and Funding Progress:The funded status of the plan beginning as of October 1, 2010, was as follows:Schedule of Funding Progress:UnfundedActuarial Actuarial UAAL as aActuarial Actuarial Accrued Accrued PercentageValuation Value of Liabilities Liabilities Funded Covered of CoveredDate Assets (AAL) (1) (UAAL) (2) Ratio Payroll Payroll09-30-2008 0 95,698,806 95,698,806 0.00% 96,747,240 98.9%09-30-2009 N/A N/A N/A N/A N/A N/A09-30-2010 0 111,658,020 111,658,020 0.00% 88,405,550 126.3%(1) Actuarial liability determined under the projected unit credit cost method.(2) Actuarial accrued liability less actuarial value of assets.Actuarial valuations of the plan involve estimates of the value of reported amounts and assumptionsabout the probability of occurrence of events for into the future. Examples include assumptionsabout future employment, mortality, and the healthcare cost trend. Amounts determined regardingthe funded status of the plan and annual required contributions of the employer are subject tocontinual revision as actual results are compared with actual results are compared with pastexpectations and new estimates are made about the future. The schedule of funding progresspresents multiyear trend information that shows whether the actuarial value of the plan assets isincreasing or decreasing over time relative to the actuarial accrued liabilities for benefits.Unfunded Actuarial Accrued Liability: The Unfunded Actuarial Accrued (UAAL) is the ctuarialliability offset by any assets set aside in a trust to provide retiree health benefits. This is equal to thevalue of the retiree health benefits accrued to date that has not been funded. The UAAL must beamortized over a period not exceeding 30 years and included in the ARC (Annual Required60

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSContribution) amount each year. The amortization of UAAL is calculated below as a level dollar of28 years on a closed basis.October 1, 2010-September 30, 2011Unfunded Actuarial Liability (UAAL)Actuarial Accrued Liability $111,658,020Assets -Unfunded Actuarial Accrued Liability $111,658,020Fund Percentage 0.00%Amortization of UAAL for ARCUAAL $111,658,020Amortization Period28 yearsAmortization Amount-October 1, 2010 $6,443,202Interest to end of year $257,728Amortization Amount- September 30, 2011 $6,700,930Actuarial Methods and Assumptions:Projections of benefits for financial reporting purposes are based on the substantive plan asunderstood by the employer and the plan members and include the types of benefits provided at thetime of each valuation and the historical pattern of sharing of benefit costs between the employerand plan members to that point. The actuarial methods and assumptions used include techniquesthat are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarialvalue of assets, consistent with the long-term perspective of the calculations. The actuarial costmethod determines, in a systematic way, the incidence of plan sponsor contributions required toprovide plan benefits. It also determines how actuarial gains and losses are recognized in pensioncosts. These gains and losses result from the difference between the actual experience under theplan and the experience by the actuarial assumptions.The cost of the Plan is derived by making certain specific assumptions as to rates of interest,mortality, turnover, etc. which are assumed to hold for many years in the future.In the actuarial valuation beginning October 1, 2010, the Unit Credit Actuarial Cost Method wasused. This method includes the following components:1. The normal cost is the actuarial present value of benefits allocated to the valuation year.2. The actuarial liability is the actuarial present value of benefits accrued as of the valuationdate.3. Valuation assets are equal to the market value of assets of the valuation date, if any. Theplan is unfunded and therefore no investment rate of returned was used. An inflation rateof 2.75% was used for the actuarial study. Salary or benefit increases were notapplicable to the study.4. Unfunded Actuarial Accrued Liability is the difference between the Actuarial AccruedLiability and the Valuation Assets. It is amortized over 28 year (the maximumpermissible period under GASB 45 is 30 years).61

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTS5. Health Cost Trend used in the actuarial study is from 6.90% trending to 4.20% overseventy two years. The basis of the health cost trend is derived from the healthcareinflation rate schedule. Retiree premium rates are assumed to increase with the HealthCost Trend.6. The City of Laredo does not have a separate, irrevocable trust fund to the annual OPEBcost; therefore a discount rate of 4.0% has been established on the long term expectationsof returns on operating funds.NOTE 11 - GENERAL LONG-TERM OBLIGATIONSThe following is a summary of changes in the City’s general long-term obligations for the yearended September 30, 2011:General Certificates Capital NetObligation of Revenue Compensated Lease Notes PensionSerial Bonds Obligation Bonds Absences Obligations Payable ObligationsLong Term Liabilities:Beginning Balances $ 21,166,090 157,247,881 29,390,000 15,927,701 465,231 680,000 44,707,668Additions 3,501,891 9,545,000 10,445,000 6,475,825 807,652 - 10,760,730Retirements (2,990,561) (5,110,793) (1,575,000) (1,690,659) (570,009) (85,000) -Ending Balances 21,677,420 161,682,088 38,260,000 20,712,867 702,874 595,000 55,468,398Current Liabilities:Due Within One Year 3,476,587 7,157,804 1,900,000 2,630,835 473,076 85,000 -Total Liabilities $ 25,154,007 168,839,892 40,160,000 23,343,702 1,175,950 680,000 55,468,398Compensated absences are generally liquidated by the General Fund.Bonds payable as of September 30, 2011 are comprised of the following issues:A - General Obligation Serial Bonds$24,455,000 General Obligation Refunding Bonds, Series 2005 issued for the purpose of refundingoutstanding obligations in order to achieve a debt service savings and pay cost related to the issuance ofthe bonds. Principal is due in varying amounts through 2021 with interest varying from 3.50% to5.00% interest per annum.$ 13,992,744$17,865,000 General Obligation Refunding Bonds, Series 2006 issued for the purpose of refundingoutstanding obligations in order to restructure the City’s debt service requirements and achieve a debtservice savings. Principal is due in varying amounts through 2013 with interest varying from 4.00% to5.00% per annum. 833,658$27,150,000 General Obligation Refunding Bonds, Series 2009 issued for the purpose of refundingoutstanding obligations in order to restructure the City’s debt service requirements and achieve a debtservice savings. Principal is due in varying amounts through 2018 with interest varying from 2.75% to5.00% per annum. $ 6,825,71462

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTS9,345,000 General Obligation Refunding Bonds, Series 2010 issued for the purpose of refundingoutsanding obligations in order to restructure the City's debt service requirements and achieve a debtservice savings. Principal is due in varying amounts through 2030 with interest varying from 2.99%to 5.00% per annum. $ 3,501,891Total General Obligation Bonds $ 25,154,007Due Within One Year $ 3,476,587B – Certificates of Obligation$9,925,000 2002 Combination Tax and Revenue Certificates of Obligation issued for the purpose ofacquiring downtown properties, a property known as Slaughter Farm, acquisition of land innortheast Laredo and land for the Fire Training and Law Enforcement Facility. Principal is due invarying amounts through 2022 with interest varying from 3.25% to 5.00% per annum. $ 50,000$3,510,000 Combination Tax and Revenue Certificates of Obligation, Series 2003, for the purposeof paying all or a portion of the City’s contractual obligations for the purpose of constructingdrainage improvements, including pilot channel, constructing and equipping a fire station, for thepayment of legal, fiscal, architectural and engineering fees in connection with this. Principal is duein varying amounts through 2023 with interest from 3.40% to 4.50% per annum.2,515,000$13,535,000 Combination Tax and Revenue Certificates of Obligation, Series 2004, for the purposeof paying street, parking, and landfill improvements, including costs of issuance. Principal is due invarying amounts through 2024 with interest from 3% to 5% per annum. 1,065,000$15,625,000 Combination Tax and Revenue Certificates of Obligation, Series 2005, for the purposeof purchasing vehicles, and equipment for the Fire Department, purchasing vehicles for thePlanning, Building and Public Works Department, acquiring and constructing a City communicationsystem, making improvements to the City Health Clinic, acquiring land and equipment for andmaking improvements to municipal parks, acquiring land and preliminary design for variousdrainage projects, and for the payment of legal, fiscal, and engineering fees in connection with suchprojects; and paying the costs related to the issuance of the certificates. Principal is due in varyingamounts through 2025 with interest from 3% to 5% per annum. 12,265,000$17,320,000 Combination Tax and Revenue Certificates of Obligation, Series 2006, for paying all ora portion of the City’s Contractual Obligations for the purpose of constructing and equipping Policeand Fire department improvements for substations, a training center and headquarters building,constructing, improving, repairing, and extending City streets, and providing for road improvementsfor Texas Department of Transportation projects together with drainage improvements and trafficand signal equipment and improvements, constructing and equipping improvements to City’s Healthcomplex, branch Library, and municipal parks, and for the payment of legal, fiscal, and engineeringfees in connection with such projects. Principal is due in varying amounts through 2026 withinterest from 4% to 4.5% per annum. $ 14,415,00063

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTS$3,680,000 Public Property Finance Contractual Obligations, Series 2006, issued for the purpose ofpurchasing police vehicles, equipment and enhancements for the police dispatch/radio facility, as wellas vehicles and safety equipment for the fire department, and vehicles, heavy equipment, and officeenhancements for Public Works and other City departments. Principal is due in varying amountsthrough 2012 with interest at 3.586% per annum. $ 790,000$72,480,000 Combination Tax and Revenue Contractual Obligations, Series 2007, for the purpose ofconstructing City streets and sidewalks, traffic signals and lighting improvements, equipment andvehicles for various City departments, developing various recreational facilities, improvements tovarious City facilities, and the payment of legal, fiscal, and engineering fees related to the variousprojects. Principal is due in varying amounts through 2024 with interest from 4% to 5.25% perannum. 61,590,000$30,065,000 Combination Tax and Revenue Contractual Obligations, Series 2008A, for the purpose ofconstructing City streets and sidewalks, traffic signals and lighting improvements, equipment andvehicles for various City departments, developing various recreational facilities, improvements tovarious City facilities, land acquisition, and the payment of legal, fiscal, and engineering fees relatedto the various projects. Principal is due in varying amounts through 2028 with interest from 3.5% to5% per annum. 29,600,000$11,270,000 Combination Tax and Revenue Contractual Obligations, Series 2009A, for the purpose ofconstructing City streets and sidewalks, traffic signals and lighting improvements, equipment andvehicles for various City departments, improvements to various City facilities, land acquisition, andthe payment of legal, fiscal, and engineering fees related to the various projects. Principal is due invarying amounts through 2021 with interest from 2% to 5% per annum. 10,660,000$5,095,000 Public Property Finance Contractual Obligations, Series 2009, for the purpose of acquiringand purchasing equipment for various City departments and the payment of issuance fees. Principal isdue in varying amounts through 2014 with interest from 2% to 3% per annum. 4,895,000$13,465,000 Combination Tax and Revenue Contractual Obligations, Series 2009B (Build AmericaBonds), for the purpose of constructing City streets and sidewalks, traffic signals and lightingimprovements, equipment and vehicles for various City departments, improvements to various Cityfacilities, land acquisition, and the payment of legal, fiscal, and engineering fees related to the variousprojects. Principal is due in varying amounts from 2022 through 2029 with interest of 6.366% perannum. 13,465,000$5,080,000 Public Property Finance Contractual Obligations, Series 2010, for the purpose of acquiringand purchasing equipment for various City departments and the payment of issuance costs. Principal isdue in varying amounts through 2018 with interest of 3.875% per annum. 454,892$4,095,000 Combination Tax and Airport Revenue Contractual Obligations, Series 2010, for thepurpose of constructing, improving, and maintaining the City’s Municipal Airport, and the payment oflegal, fiscal, and engineering fees related to the various projects. Principal is due in varying amountsthrough 2029 with interest of 4.750% per annum $ 3,960,00064

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTS$2,070,000 Combination Tax and Airport Revenue Refunding Contractual Obligations, Series 2010,for the purpose of refunding the Municipal Airport land indenture. Principal is due in varyingamounts through 2029 with interest of 4.750% per annum. $ 2,000,000$2,040,000 Combination Tax and Airport Revenue Refunding Contractual Obligations, Series2010B, for the purpose of constructing and equipping a Federal inspection station at the City'sMunicipal Airport, and the payment of legal, fiscal, and engineering fees related to the project.Principal is due in varying amounts through 2029 with interest of 5.200% per annum. 1,975,000$9,545,000 Combination Tax and Revenue Contractual Obligations, Series 2010, for the purpose ofconstructing City streets and sidewalks, traffic signals and lighting improvements, equipment andvehicles for various City departments, improvements to various City facilities, land acquisition, andthe payment of legal, fiscal, and engineering fees related to the various projects. Principal is due invarying amounts through 2030 with interest from 2.00% to 5.00% per annum. 9,140,000Total Certificates of Obligation $ 168,839,892Due Within One Year $ 7,157,804The applicable bond ordinances for the aforementioned debt contain limitations and restrictions onannual debt service requirements and maintenance of and flow of monies through various restrictedaccounts as well as minimum amounts to be maintained in various sinking funds.The City is in compliance with all significant limitations and restrictions.C - Sales Tax Revenue BondsThe City’s Sales Tax Revenue Bonds are special obligations of the City and are collateralized by revenuefrom a ¼ of 1% sales and use tax collected within the City’s boundaries. Sales Tax Revenue Bonds as ofSeptember 30, 2011 consist of the following:$33,550,000 2005 Sports Venue Sales Tax Revenue Improvement and Refunding Bondsissued for the purpose of acquiring and constructing additional parking for the multipurposeentertainment arena and refunding a portion of the City’s outstanding Sports Venue Sales TaxRevenue Bonds, Series 2001 in order to achieve a debt service savings and to pay costs relatedto the issuance of the bonds. Principal is due in varying amounts through 2024 with interestfrom 3.00% to 5.00% per annum.$ 31,290,00065

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSSports Venue Sales Tax revenue Bonds issued for the purpose of financing a baseball stadiumand related infrastructure as part of the enlarged Laredo Sports Venue Project for the multipurposeentertainment aena and to pay costs related to the issuance of the bonds. Principal isdue in varying amounts through 2036 with interest from 1.088% to 5.85% per annum. $ 10,445,000Total Sales Tax Revenue Bonds $ 40,160,000Due Within One Year $ 1,900,000D - Capital Lease ObligationsThe City has entered into several lease-purchase agreements for various pieces of equipment. Theselease agreements qualify as capital leases for accounting purposes (titles transfer at the end of thelease terms) and, therefore, have been recorded at the present value of the future minimum leasepayments as of the date of their inception.$1,330,425 Ford Motor Credit Company for the purchase of fifty law enforcement vehicles forthe Police Department. Payments are due in annual installments of $307,800.43 through June2013. Interest is at 5.50% per annum.$ 568,298$607,652 Kansas State Bank for the purchase of thirty law enforcement vehicles for the PoliceDepartment. Payments are due in annual installments of $214,955.79 through 2014. Interest isat 3.032% per annum. 607,652Total Present Value of Future Minimum Lease Payments 1,175,950Plus Amount Representing Interest 84,518Total Minimum Lease Payments $ 1,260,468The assets acquired through capital leases are as follows:Governmental ActivitiesAsset:Automotive Equipment $ 4,343,941Machinery & Equipment 2,143,500Less: Accumulated Depreciation (5,216,715)Total $ 1,270,726The future minimum lease obligations and the net present value of these minimum lease paymentsas of September 30, 2011, are as follows:66

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSYear Ending Sep. 30GovernmentalActivities2012 $ 522,7562013 522,7562014 214,956Total Minimum lease payments 1,260,468Less: amount representing interest (84,518)Present value of minimum lease payments $ 1,175,950Capital leases will be paid within the next three years, therefore only data for those years is shown.E - Notes PayableSection 108 Loan $1,700,000 Chase Manhattan Bank through HUD 108Program for the restoration of the Hamilton Hotel into a 165 low andmoderate income residential units. Principal is due annually with avariable interest rate between 6.2013% and 6.4050%. $ 680,000Due Within One Year $ 85,000F – Prior-year Defeasance of DebtIn prior years, the City defeased certain general obligation and other bonds by placing the proceedsof new bonds in an irrevocable trust to provide for all future debt service payments on the oldbonds. Accordingly, the trust account assets and liability of the defeased bonds are not included inthe City’s financial statements. As of September 30, 2011, $11.875 million in bonds outstandingare considered defeased.G – OPEBUpdated on September 30, 2011, the latest actuarial valuation reflected a net obligation for OtherPost-Employment Benefits in the amount of $55,468,398, with the unfunded actuarial liability at$111,658,020.NOTE 12 - PROPRIETARY FUNDS LONG-TERM OBLIGATIONSThe following is a summary of changes in long-term obligations for the City's Proprietary Funds forthe year ended September 30, 2011:67

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSRevenue Certificates of General Oblig. NoteBonds Obligation Bond PayableLong Term Liabilities:Beginning Balances $ 100,892,000 119,120,109 21,522,884 19,637,040Additions 80,405,000 - 5,843,108 -Retirements - (5,575,000) - -Amortization of Deferred Charges - - (530,261) -Due Within One Year (7,983,000) (4,092,196) (5,538,414) (892,590)Ending Balances 173,314,000 109,452,913 21,297,317 18,744,450Current Liabilities:Due Within One Year 7,983,000 4,092,196 5,538,414 892,590Total Liabilities $ 181,297,000 113,545,109 26,835,731 19,637,040Landfill CompensatedCosts AbsencesLong Term Liabilities:Beginning Balances $ 9,986,580 1,009,275Additions 462,989 172,761Retirements - (94,634)Ending Balances 10,449,569 1,087,402Current Liabilities:Due Within One Year - 726,404Total Liabilities $ 10,449,569 1,813,806A – Bonds$12,105,000 2002 International Toll Bridge System Revenue Bond issued for the purpose toacquire, purchase, construct, improve, enlarge and equip the international bridge withprincipal due in varying amounts through year 2022, including interest at 4.0% to 5.0% perannum. $ 7,840,000$741,000 2002 Waterworks System Revenue Bond issued for the purpose of makingimprovements and extension of the Waterworks System with principal due in varyingamounts through year 2024, including interest at 3.3% to 5.9 % per annum. 558,000$710,000 2002 Sewer System Revenue Bond issued for the purpose of makingimprovements and extension of the Sewer System with principal due in varying amountsthrough year 2024, including interest at 3.3% to 5.9% per annum. 535,000$5,935,000 2004 International Toll Bridge System Revenue Bond issued for the purpose ofacquiring, purchase, construct, improve, enlarge and equip an International Toll Bridge withprincipal due in varying amounts through year 2024, including interest at 2.3% to 6.0% perannum. 4,540,000$7,480,000 2004 Waterworks and Sewer Systems Revenue issued for the purpose ofimproving and extending the combined Water and Sewer System with principal due invarying amounts through year 2024, including interest at 3.0% to 5.0% per annum. $ 5,590,00068

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTS$23,760,000 2005A International Toll Bridge System Revenue Improvement and RefundingBond issue for the purpose to acquire, purchase, construct, improve, enlarge equp anInternational Toll Bridge and refunding of State Infrastructure Bank Loans with the TexasDeparment of Transportation with principal due in varying amounts through year 2025,including interest at 3.0% to 5.0% per annum. $ 18,740,000$24,565,000 2005B International Toll Bridge System Revenue Refunding Bond issued forthe purpose of refunding other Bridge Revenue Bond issues with principal due in varyingamounts through year 2019, including interest at 4.0% to 5.0% per annum. 21,095,000$6,420,000 2005 Waterworks & Sewer Systems Revenue issued for the purpose ofimproving and extending the combined Water and Sewer System with principal due invarying amounts through year 2025, including interest at 3.0% to 4.4% per annum. 5,020,000$8,950,000 2006 Waterworks & Sewer Systems Revenue Bond Revenue issued for thepurpose of improving and extending the combined Water and Sewer System with principaldue in varying amounts through year 2026, including interest at 4.0% to 4.5% per annum. 11,275,000$17,670,000 2007 Waterworks & Sewer Systems Revenue Bond issued for the purpose ofimproving and extending the combined Water and Sewer System with principal due invarying amounts through year 2027, including interest at 4.0% to 4.75% per annum. 15,275,000$3,070,000 2008 International Toll Bridge System Revenue Bond issued for the purpose ofimproving and constructing expansion of inspection station booths for Bridge No. IV withprincipal due in varying amounts through year 2028, including interest at 4.71% per annum.2,770,000$915,000 2008 Waterworks and Sewer System Revenue Bond for the purpose ofconstructing, improving, and extending the waterworks and sewer systems with principaldue in varying amounts through year 2028, including interest at 4.21% to 5.26% per annum. 824,000$7,500,000 2009 Waterworks and Sewer System Revenue Bond for the purpose ofpurchasing and acquiring additional water rights with principal due in varying amountsthrough year 2029 at 0.001 per annum. 6,830,000$82,175,000 2010 Waterworks and Sewer System Revenue Bond for the purpose ofimproving and extending the combined water and sewer system with principal due invarying amounts through year 2040 at 2.00% per annum. 80,405,000Subtotal $ 181,297,000Deferred Charges for Various Revenue Refunding Bonds -Total Revenue Bonds $ 181,297,000Due Within One Year $ 7,983,00069

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSThe applicable bond ordinances for the aforementioned debt contain limitations and restrictions onannual debt service requirements and maintenance of and flow of monies through various restrictedaccounts as well as minimum amounts to be maintained in various sinking funds. The City is incompliance with all significant limitations and restrictions.B – Certificates of Obligations$9,925,000 2002 Combination Tax and Revenue Certificates of Obligtion issued for thepurpose of acquiring downtown properites, a property known as Slaughter Farm, acquisition ofland in northeast Laredo and land for the Fire Training and Law Enforcement Facility.Principal is due in varying amounts through 2022 with interest varying from 3.25% to 5.00%per annum. $ 420,000$3,620,000 2003 Combination Tax and Sewer System Revenue Certificates of Obligation, forthe purpose of paying all or a portion of the City’s contractual obligations for constructing,improving, and extending the City’s Sewer system, and for the payment of legal, fiscal, andengineering fees in connection with this project. Principal is due in varying amounts through2023, with interest varying from 3.40% to 4.50% per annum. 2,545,000$13,535,000 2004 Combination Tax and Revenue Certificates of Obligation for the purpose ofpaying all or a portion of the City's contractual obligations for the purpose of paying street,parking, and landfill improvements, including costs of issuance. Principal is due in varyingamounts through 2024 wtih interest from 3% to 5% per annum. 4,570,000$72,480,000 2007 Combination Tax and Revenue Contractual Obligations, for the purpose ofconstructing City streets and sidewalks, traffic signals and lighting improvements, equipmentand vehicles for various City departments, developing various recreational facilities,improvements to various City facilities, and the payment of legal, fiscal, and engineering feesrelated to the various projects. Principal is due in varying amounts through 2024 with interestfrom 4% to 5.25% per annum. 6,340,000$3,555,000 2008 Public Property Finance Contractual Obligations, for the purpose ofpurchasing municipal buses for the Mass Transit System with principal due in varying amountsthrough 2020 with interest at 3.399% per annum. 2,820,000$46,235,000 2008B Combination Tax and Waterworks and Sewer System Revenue Certificatesof Obligation, for the purpose of constructing, improving, and extending the City’s Waterworksand Sewer systems, and the payment of legal, fiscal, and engineering fees related to the variousprojects. Principal is due in varying amounts through 2033 with interest from 3.50% to 5.00%per annum. 43,340,000$13,475,000 2009C Cominbination Tax and Waterworks and Sewer System RevenueCertificates of Obligation fro the purpose of construcitng and extending Waterworks and SewerSystem with principal due in varying amounts through year 2021, including interest at 2.00% to5.00% per annum. 11,495,000$37,945,000 2009D Combination Tax and Waterworks and Sewer System Revenue Certificatesof Obligation for the purpose of constructing and extending Waterworks System and SewerSystem with principal due in varying amount through year 2039, including interest at 6.566%per annum. $ 37,945,00070

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTS$5,060,000 2010 Public Property Finance Contractual Obligations, for the purpose ofpersonal property with principal due in varying amounts through 2018 with interest at3.875% per annu. $ 4,070,109Total Certifcates of Obligation $ 113,545,109Due Within One Year $ 4,092,196C - General Obligation Bonds$24,455,000 2005 General Obligation Refunding Bonds issued for the purpose of refundingoutstanding obligations in order to achieve a debt services savings and pay cost related to theissuance of the bonds. Principal is due in varying amounts through 2021 with interestvarying from 3.50% to 5.00% interest per annum. $ 8,572,256$17,865,000 2006 General Obligtion Refunding Bonds issued for the purpose of refundingoutstanding obligations in order to restructure the City's debt service requirements andachieve a debt service savings. Principal is due in varying amounts through 2013 withinterest varying from 4.00% to 5.00% per annum. 2,591,342$27,150,000 2009 General Obligation Refunding Bonds issued for the purpose of refundingoutstanding obligations in order to achieve a debt service savings and pay costs related to theissuance of the bonds. Principal is due in varying amounts through 2018 with interestvarying from 2.75% to 5.00% per annum. 10,359,286$9,345,000 2010 General Obligation Refunding Bond issued for the purpose of refundingoutstanding obligations in order to achieve a debt service savings and pay cots related to theissuance of the bonds. Principal is due in varying amounts through 2022 with interestvarying from 2.00% to 4.00% per annum. 5,843,108Subtotal $ 27,365,992Deferred Charges for Various General Obligation Bonds (530,261)Total General Obligation Bonds $ 26,835,731Due Within One Year $ 5,538,414D - Notes PayableTexas Department of Transportation - State Infrastructure Bank loan for $27,000,000 for thedesign and construction of bridge facilities and a portion of the costs of constructing thehighway improvements. The City of Laredo received $19,500,000 of the loan proceeds infiscal year 1998 and $9,806,858 in fiscal year 1999. Interest rate on the note is 4.10% simpleinterest per annum. Interest is deferred for seven years and added to the principal outstandingbalance. The note has a final maturity date of October 1, 2027. $ 18,744,450Due Within One Year $ 892,59071

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSE - Compensated AbsencesThe long-term portion of compensated absences for all City employees for Proprietary funds iscomprised of the following:F - Refunding and Early ExtinguishmentFundAmountTransit System $ 78,826Bridge System 355,042Municipal Housing 12,038Waterworks System 279,066Sewer System 87,471Solid Waste Fund 274,959Total $ 1,087,402Due Within One Year $ 726,404General Obligation Refunding Bonds, Series 2010On October 26, 2010, the City of Laredo issued $6,145,922 in General Obligation Refunding Bonds,Series 2010 with an average interest rate of 3.75% to advance the following:AveragePrinicpal AmountBond Issue Interest Rate RefundedCombination Tax & Sewer Revenue C.O., Series 2000 5.25% $ 185,000Combination Tax & Water Revenue C.O., Series 2000 5.25% 255,000Combination Tax & Revenue C.O., Series 2002 4.50% 10,700,000The net proceeds of $6,123,725 (after payment of $118,623 in underwriting fees, insurance, andother issuance costs) plus an additional cash contribution of $9,034 for the 2000 and 2002 SeriesC.O.’s sinking funds monies were used to purchase governmental securities. Those securities weredeposited in an irrevocable trust within an escrow agent to provide for all future debt servicepayments on the 2000 and 2002 Series C.O.’s. As a result, the 2000 and 2002 Series C.O.’s bondsare considered defeased and the liability for those bonds has been removed from the governmentwideStatement of Net Assets.The advance refunding resulted in a difference between the reacquisition price and the net carryingamount of the old debt of $7,661.473. This difference, reported in the accompanying financialstatements as a deduction from bonds payable, is being charged to operations through the year 2022using the effective-interest method. The agency completed the advance refunding and its total debtservice payments decrease over the next eleven years by $344,073 and resulted in an economic gain(difference between the present value of the old and the new debt service payments) of $307,338.72

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSG - Prior-year defeasance of debt.In prior years, the City defeased certain revenue bonds by placing the proceeds of new bonds in anirrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, thetrust account assets and liability of the defeased bonds are not included in the City's financialstatements. As of September 30, 2011 $15,634,576 in bonds outstanding are considered defeased.H - Landfill Closure and Post Closure CostsDuring fiscal year 1994, the City adopted the provisions of GASB Statement No.18 "Accounting forMunicipal Solid Waste Landfill Closure and Post Closure Care Costs." The landfill closure andpost closure costs and the liability for landfill closure and post closure costs in Solid Waste Fund asof September 30, 2011 is $15,062,067 of which $10,449,569 has been recognized and recorded as aliability based on the Municipal Solid Waste Landfill use.Federal and State laws and regulations require the City to place a final cover on its landfill when itstops accepting waste and perform certain maintenance and monitoring functions at the landfill sitefor thirty years after closure. In addition to operating expenses related to current activities of thelandfill, a liability is being recognized based on future closure and post closure care costs that willbe incurred near or after the date the landfill no longer accepts waste. The recognition of theselandfill closure and post closure care costs is based on the capacity of the landfill used to date.The liability for landfill closure and post closure care costs of $10,449,569 as of September 30,2011 represents the cumulative amount for 123.9 acres of the landfill filled with solid waste forclosure and 200 acres for post-closure care. The percentage of the landfill capacity for solid wasteused as of September 30, 2011 is 69.38%. With Landfill receiving a permit for vertical expansionthe estimated remaining life of the landfill is 7 years. Based on the remaining life, the landfill willbe filled to capacity by the year 2018. The estimated total current cost of the landfill closure andpost closure care ($15,062,067) is based on the amount that would be paid if all equipment,facilities, and services required to close, monitor, and maintain the landfill were acquired as ofSeptember 30, 2011. However, the actual costs of closure and post closure care may be higher dueto inflation, changes in technology, or changes in solid waste management laws and regulations.The landfill is divided into four phases and is further divided into cells of 3 to 7 acres. The newregulations require that liner systems be installed in all cells opened after July 1, 1994. All cellsregardless of their age will be required to receive final cover in conformity with the specifications ofthe current laws.Federal and State laws and regulations require the City of Laredo to make annual financialassurances regarding the financing of closure and post closure care. The City is in compliance withthis requirement. It is anticipated that future inflation costs will be financed in part from earningson investments and by a federal mandate fee of $4.25 charged monthly to all garbage users.Commercial accounts, formerly exempt from the fee, are now charged the federal mandate fee. Theremaining portion of anticipated future inflation costs and additional costs that might arise fromchanges in post closure requirements (for example, changes in technology or more rigorousenvironmental regulations) may need to be covered by charges to future landfill users, taxpayers, orboth.73

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSNOTE 13 - INTERFUND RECEIVABLES AND PAYABLESThe purposes of interfund balances are to provide cash flows for grants and to cover funds withnegative cash. Interfund receivables and payables as of September 30, 2011 are as follows:Governmental ActivityInterfundReceivablesInterfundPayables2007 Certificate of ObligationSolid Waste Fund $ - $ 946,202Due to Business Type Activities for Internal ServiceFunds Allocation - 779,514Total Governmental Activity $ - $ 1,725,716Business Type ActivitySolid Waste Fund2007 Certificate of Obligations $ 946,202 $ -Due from Governmental Activities for Internal ServiceFunds Allocation 779,514 -TOTAL BUSINESS TYPE ACTIVITY $ 1,725,716 $ -74

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSNOTE 14 - INTERFUND TRANSFERSThe purpose of interfund transfers is to transfer funds based on City ordinance for operationalpurposes or grant purposes. Transfers between funds during the year were as follows:Transfers Transfers NetIn Out TransfersGOVERNMENTAL FUND:Contractual ObligationsTransit $ - 288 (288)CAPITAL IMPROVEMENTSBridge 3,691,761 - 3,691,761Waterworks 1,375,144 - 1,375,144DEBT SERVICEBridge 776,347 - 776,347TOTAL - GOVERNMENT TYPE 5,843,252 288 5,842,964BUSINESS TYPE:TRANSITContractual Obligations 288 - 288WATERWORKSCapital Improvements - 1,375,144 (1,375,144)BRIDGECapital Improvements - 3,691,761 (3,691,761)Debt Service - 776,347 (776,347)TOTAL BUSINESS TYPE $ 288 5,843,252 (5,842,964)75

CITY OF LAREDO, TEXASNOTES TO FINANCIAL STATEMENTSNOTE 15 - Debt Service RequirementsThe following is a summary of the City's debt service requirements for all funds as of September 30, 2011Business-Type and Governmental ActivitiesRevenue Bonds Notes Payable Certificates of Obligation General Obligation Bonds Debt Service to Maturity76Year Principal Interest Total Principal Interest Total Principal Interest Total Principal Interest Total Principal Interest Total2012 9,893,000 10,383,223 20,276,223 1,450,666 870,260 2,320,926 11,250,000 13,748,316 24,998,316 9,015,002 2,137,887 11,152,889 31,608,668 27,139,686 58,748,3542013 10,341,000 9,975,063 20,316,063 1,508,431 811,765 2,320,196 11,542,100 13,349,483 24,891,583 9,989,999 1,786,563 11,776,562 33,381,530 25,922,874 59,304,4042014 10,777,000 9,532,800 20,309,800 1,260,912 750,343 2,011,255 12,558,921 12,899,044 25,457,965 8,979,999 1,433,452 10,413,451 33,576,832 24,615,639 58,192,4712015 11,257,000 9,064,219 20,321,219 1,091,941 702,829 1,794,770 12,475,740 12,379,796 24,855,536 4,649,999 1,123,037 5,773,036 29,474,680 23,269,881 52,744,5612016 11,782,000 8,547,177 20,329,177 1,133,226 658,674 1,791,900 13,027,561 11,829,585 24,857,146 4,675,000 913,250 5,588,250 30,617,787 21,948,686 52,566,4732017 12,339,000 7,993,716 20,332,716 1,176,203 614,436 1,790,639 13,599,383 11,253,214 24,852,597 4,975,002 687,862 5,662,864 32,089,588 20,549,228 52,638,8162018 12,935,000 7,409,595 20,344,595 1,220,942 567,223 1,788,165 14,239,159 10,627,286 24,866,445 4,010,000 446,113 4,456,113 32,405,101 19,050,217 51,455,3182019 10,646,000 6,789,578 17,435,578 1,267,516 517,997 1,785,513 14,288,935 9,986,218 24,275,153 2,130,000 252,912 2,382,912 28,332,451 17,546,705 45,879,1562020 10,499,000 6,282,159 16,781,159 1,230,999 466,709 1,697,708 14,953,710 9,331,249 24,284,959 1,919,998 153,911 2,073,909 28,603,707 16,234,028 44,837,7352021 11,005,000 5,776,398 16,781,398 1,281,470 416,238 1,697,708 15,269,397 8,636,749 23,906,146 1,445,001 72,108 1,517,109 29,000,868 14,901,493 43,902,3612022 11,539,000 5,245,910 16,784,910 1,334,010 363,698 1,697,708 15,992,129 7,881,958 23,874,087 730,000 14,600 744,600 29,595,139 13,506,166 43,101,3052023 11,182,000 4,685,871 15,867,871 1,388,704 309,004 1,697,708 16,345,000 7,074,016 23,419,016 - - - 28,915,704 12,068,891 40,984,5952024 11,716,000 4,143,158 15,859,158 1,445,641 252,067 1,697,708 16,570,000 6,227,469 22,797,469 - - - 29,731,641 10,622,694 40,354,3352025 7,850,000 3,669,581 11,519,581 1,504,913 192,796 1,697,709 16,790,000 5,354,560 22,144,560 - - - 26,144,913 9,216,937 35,361,8502026 5,838,000 3,312,744 9,150,744 1,566,614 131,094 1,697,708 16,400,000 4,460,928 20,860,928 - - - 23,804,614 7,904,766 31,709,3802027 5,057,000 3,061,589 8,118,589 1,630,803 66,863 1,697,666 15,845,000 3,620,448 19,465,448 - - - 22,532,803 6,748,900 29,281,7032028 3,921,000 2,849,215 6,770,215 - - - 9,915,000 2,943,247 12,858,247 - - - 13,836,000 5,792,462 19,628,4622029 3,805,000 2,665,893 6,470,893 - - - 7,710,000 2,461,222 10,171,222 - - - 11,515,000 5,127,115 16,642,1152030 3,605,000 2,480,351 6,085,351 - - - 5,375,000 2,091,177 7,466,177 - - - 8,980,000 4,571,528 13,551,5282031 3,805,000 2,284,779 6,089,779 - - - 4,895,000 1,784,706 6,679,706 - - - 8,700,000 4,069,485 12,769,4852032 4,010,000 2,077,364 6,087,364 - - - 5,135,000 1,500,327 6,635,327 - - - 9,145,000 3,577,691 12,722,6912033 4,230,000 1,857,510 6,087,510 - - - 5,380,000 1,202,334 6,582,334 - - - 9,610,000 3,059,844 12,669,8442034 4,460,000 1,625,633 6,085,633 - - - 2,390,000 971,440 3,361,440 - - - 6,850,000 2,597,073 9,447,0732035 4,705,000 1,381,062 6,086,062 - - - 2,495,000 811,065 3,306,065 - - - 7,200,000 2,192,127 9,392,1272036 4,960,000 1,125,150 6,085,150 - - - 2,600,000 643,796 3,243,796 - - - 7,560,000 1,768,946 9,328,9462037 4,460,000 879,862 5,339,862 - - - 2,715,000 469,304 3,184,304 - - - 7,175,000 1,349,166 8,524,1662038 4,695,000 643,931 5,338,931 - - - 2,835,000 287,098 3,122,098 - - - 7,530,000 931,029 8,461,0292039 4,940,000 395,625 5,335,625 - - - 2,955,000 97,012 3,052,012 - - - 7,895,000 492,637 8,387,6372040 5,205,000 134,156 5,339,156 - - - - - - - - - 5,205,000 134,156 5,339,156Total 221,457,000 126,273,312 347,730,312 21,492,991 7,691,996 29,184,987 285,547,035 163,923,047 449,470,082 52,520,000 9,021,695 61,541,695 581,017,026 306,910,050 887,927,076

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSNOTE 16 - CONSTRUCTION AND IMPROVEMENT COMMITMENTSAs of September 30, 2011, the City had contractual commitments of $146,084,862 for variousconstruction and improvement projects. The commitments are summarized as follows:Project Description Commitment Financing SourcesCommunity Development $ 792,829 Grant ProceedsEnvironmental Services 466,120 Fund Revenues/Bond/Grant ProceedsCapital Improvements 133,272 Fund RevenuesAirport Construction 6,512,395 Grant ProceedsColonias 2,067,527 Grant ProceedsCapital Grants 1,247,698 Grant Proceeds2006 C.O. Issue 136,175 Bond Proceeds2007 C.O. Issue 2,842,949 Bond Proceeds2008 C.O Issue 4,368,081 Bond Proceeds2009 C.O. Issue 5,970,582 Bond Proceeds2010 C.O. Issue 774,486 Bond ProceedsBaseball Stadium 14,148,660 Fund Revenue/Bond ProceedsBridge 342,268 Bond ProceedsWaterworks System 103,507,438 Fund Revenues/ Bond / Grant ProceedsWastewater 2,774,382 Fund Revenues/ Bond ProceedsTotal Commitments $ 146,084,862NOTE 17 – FUND EXPENDITURES EXCEEDING APPROPRIATIONSDuring the fiscal year ended September 30, 2011, expenses/expenditures in General Fund, DebtService, Nonmajor Governmental Funds and Internal Service Funds exceeded appropriations asfollows: General Fund $5,036,510; Debt Service Fund $98,788; Hotel-Motel Occupancy Tax $533;Mercado Management $6,085; Laredo Energy Arena $43,969 and Health and Benefits Fund$1,218,850.NOTE 18 - RISK MANAGEMENTA. HEALTH AND BENEFITS FUNDIn January 1990, the City established a partial self-insured plan for medical coverage for itsemployees and an internal service fund called Risk Management. On October 1, 1995, the fundname was changed to Health and Benefits Fund. Under this plan, the City will pay for medicalclaims up to the amount of $100,000 per employee, with a maximum lifetime benefit of $1,000,000per employee. There is a maximum medical aggregate liability of $19,589,253 and projected netclaims of $17,412,669. Claims exceeding $100,000 per employee are paid by the City andreimbursed by the City's stop/loss insurance carrier. The City has accrued for claims that have beenincurred but not reported.77

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSThe incurred claims liability of $2,431,242 reported in the Fund as of September 30, 2011 is basedon the requirements of Governmental Accounting Standards Board Statement No. 10, whichrequires that a liability for claims be reported if information prior to the issuance of the financialstatements indicates that it is probable that a liability has been incurred at the date of the financialstatements and the amount of the claim liability can be reasonably estimated. Claim liabilities arecalculated considering the recent claim settlements trends including frequency and amount ofpayouts and are due within one year of the date of the statement of net assets. Changes in the Fund'sclaims liability amount in fiscal year 2009, 2010, and 2011 were:Balance at Claims and Current yearBeginning of Changes in Claims & Balance at FiscalYear Fiscal Year Estimates Payments Year end ¹2008-2009 $1,942,025 15,411,118 15,089,689 2,263,4542009-2010 2,263,454 15,518,829 15,462,854 2,319,4292010-2011 $2,319,429 16,320,094 16,208,281 2,431,242There were no changes or reductions in insurance coverage from coverage in prior years. Settledclaims did not exceed commercial excess coverage in any of the past three years.¹Claim Liabilities are due within one year of the date of the statement of net assets.B. RISK MANAGEMENT FUNDOn October 1, 1996, the City established a self-insured retention program for the worker'scompensation liability within the Risk Management Fund which also accounts for the followingpolicies: (a) General Liability (b) Law Enforcement Liability (c) Errors and Omission (d) AutoLiability (e) Auto Physical Damage - ACV. The self-insured retention program for worker'scompensation was implemented with $300,000 retention per occurrence and a $2,350,000 aggregatefor FY08-09 and $2,350,000 aggregated for FY09-10 and $2,360,000 aggregated for FY10-11. Adeductible reimbursement program was also established for claims with $5,000 retention peroccurrence through Texas Municipal League Intergovernmental Risk Pool (TMLIRP), with theexception of errors and omission, which has a $25,000 deductible. As of September 30, 2011, aliability was recorded based on fiscal year 2011 outstanding claims, which is due within one year ofthe date of the statement of net assets. Changes in this claims liability amount in fiscal years 2009,2010 and 2011 were:Balance at Claims and Current yearBeginning of Changes in Claims & Balance at FiscalYear Fiscal Year Estimates Payments Year end ²2008-2009 $1,484,301 1,922,330 2,010,452 1,396,1792009-2010 1,396,179 2,101,857 1,947,866 1,550,1702010-2011 $1,550,170 2,090,250 1,788,314 1,852,106There have been no significant changes in insurance coverage in any of the past three years. Settledclaims did not exceed commercial excess coverage in any of the past three years.²Claim Liabilities are due within one year of the date of the statement of assets.78

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSNOTE 19 – CONTINGENCIESThe City participates in a number of federal programs that are fully or partially funded by grantsreceived from other governmental units. Expenditures financed by grants are subject to audit by theappropriate grantor agency. If expenditures are disallowed due to noncompliance with grantprogram regulations, the City may be required to reimburse the grantor. As of September 30, 2011,significant amounts of grant expenditures have not been audited by the grantor agencies; however,the City believes it has substantially complied with applicable laws and regulations and that theresults of subsequent audits will not have a material effect on any of the individual governmentalfunds or the overall financial position of the City.The City is a Defendant in a number of lawsuits arising principally from claims against the City foralleged actions by City employees including alleged acts of negligence and discrimination. Totaldamages claimed are substantial; however, it has been the City's experience that such actions areresolved for amounts substantially less than the claimed amounts with no material effect on thefinancial condition of the City.NOTE 20 – DONOR-RESTRICTED ENDOWMENTSThe Canseco Foundation Children’s Endowment Trust Fund was established on January of 1998,when the City accepted the endowment for the Canseco Foundation in the amount of $50,000. Theprogram would have the City seek all opportunities to augment children’s programming resourcesprovided though the Laredo Public Library. Funding of children’s programming from the fund eachyear will be based on interest accrued on the endowment. Interest distributions will be from theCanseco Foundation Children’s Endowment Fund. For September 30, 2011, the amount of unspentinterest to date was $22,365. This amount is reported in the government-wide financial statementsunder Net Assets-Restricted for other purposes.Texas State Law:(a) Except as provided by Subsection (e), the governing board may appropriate for expenditure,for the uses and purposes for which the fund is established, the net appreciation, realizedand unrealized, in the fair market value of the assets of an endowment fund over the historicdollar value of the fund to the extent prudent under the standard provided by Section163.007.(b) A determination of the historic dollar value made in good faith by the governing board isconclusive.(c) Subsection (a) does not limit the authority of the governing board to expend funds aspermitted under other law, the terms of the applicable gift instrument, or the charter orarticles of incorporation of the institution.(d) Subsection (a) does not apply if the applicable gift instrument indicates the donor’s intentionthat the net appreciation not be extended. A restriction on the expenditure of netappreciation may not be implied from a designation of a gift as an endowment or from adirection or authorization in the applicable gift instrument to use only “income” This rule ofconstruction applies to gift instruments executed or in effect before, on, or after the effectivedate of this chapter.79

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSNOTE 21- BUDGET BASIS REPORTINGThe budgetary process is based upon accounting for certain transactions on a budget basis other thangenerally accepted accounting principles (GAAP Basis). The results of operations as presented inthe General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances are reportedin accordance with the budgetary process (budget basis) to provide a meaningful comparison withthe budget.The major difference between the budget basis “actual” and GAAP basis are that encumbrances arerecorded as the equivalent of expenditures (budget) as opposed to a reservation of fund balance(GAAP) and non-budgeted increases in compensated absences, claims payable, workmen’scompensation insurance, and allowance for doubtful accounts are recorded as expenditures whenpayments are made (budget) as opposed to when the liability is incurred (GAAP).Adjustments necessary to convert from the GAAP basis to the budget basis are as follows:GeneralFundExcess (Deficiency) of revenues and other financing sourcesover expenditures and other uses (GAAP Basis)- $ 574,108Adjustments:Timing Differences-Encumbrances (1,180,423)Basic Differences:Non Budgeted-Allowance for Doubtful Accounts 42,235Excess of revenues and other financing sources over expendituresand other uses (GAAP Basis)-budgetary classifications (564,080)Other adjustments-Excess of revenues and other financingSources over expenditures and other uses for non-budgetedFunds-(Entity Differences) 34,904,097Excess (Deficiency) of revenues and other financing sourcesover expenditures and other uses – Budget Basis $ 34,340,017NOTE 22 – FUND EQUITYThe City implemented GASB Statement No. 54, “Fund Balance Reporting and Governmental Fundtype Definitions” effective October 1, 2010. The statement established new categories for reportingfund balance, revised the definitions for governmental fund types and change the presentation offund balance. Components of fund balance of Governmental Funds are as follows:80

CITY OF LAREDO, TEXASNOTES TO BASIC FINANCIAL STATEMENTSOtherGeneral Debt GovernmantalFund Service FundsFund Balances:Nonspendable:Inventory 14,937 - 69,161Permanent Fund Principal - - 50,000Restricted for:Debt Service - 8,272,028 2,420,047Public Safety - - 7,074,789Health & Welfare - - 2,303,427Cultural & Recreation - - 19,121,170Transportation - - 168,702Capital Projects 786,681 - 64,899,686Commited to:Cash Reserves 21,212,775 - -General Government 187,341 - -Public Safety 489,519 - 56,653Public Works 85,425 - -Health & Welfare 3,370 - 4,040,800Cultural & Recreation 363,698 - 275,740Other 51,070 -Capital Projects - - 2,383,377Assigned to:Municipal Court 1,613,435 - -Public Safety - - 657,381Health & Welfare - - 782,707Cultural & Recreation - - 583,427Capital Projects - - 9,685,818Unassigned 10,712,189 - (125,741)Total Fund Balances 35,520,440 8,272,028 114,447,14481

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DEBT SERVICE

CITY OF LAREDO, TEXASDEBT SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALYear Ended September 30, 2011Variance withBudgeted Amounts Final Budget -PositiveOriginal Final Actual (Negative)REVENUES:Taxes:Current $ 12,621,488 12,621,488 12,750,734 129,246Delinquent - Prior 470,533 470,533 357,488 (113,045)Total Taxes 13,092,021 13,092,021 13,108,222 16,201Investment Income:Interest Earnings 52,515 52,515 53,437 922Restricted Interest Earnings - 14,200 14,199 (1)Total Investment Income 52,515 66,715 67,636 921Special Assessments:Paving Assessments 17,999 17,999 38,578 20,579Total Special Assessments 17,999 17,999 38,578 20,579Miscellaneous:Reimbursements - - 4,102 4,102Interest Rebates 568,359 568,359 300,014 (268,345)Total Miscellaneous 568,359 568,359 304,116 (264,243)TOTAL REVENUES 13,730,894 13,745,094 13,518,552 (226,542)EXPENDITURES:Principal Retirement:General Obligations Debt 3,293,378 3,293,378 2,990,562 302,816Revenue Bonds Debt 1,575,000 1,575,000 1,575,000 -Contractual Obligations Debt 4,810,794 4,810,794 5,110,793 (299,999)Total Principal Retirement 9,679,172 9,679,172 9,676,355 2,817Interest:General Obligations Debt 1,135,542 1,135,542 1,233,955 (98,413)Revenue Bonds Debt 1,539,194 1,539,194 1,539,194 -Contractual Obligations Debt 7,891,429 7,891,429 8,043,215 (151,786)Total Interest 10,566,165 10,566,165 10,816,364 (250,199)Other:Other 111,500 135,416 6,997 128,419Fiscal Agent Fees 28,000 28,000 7,825 20,175Bond Costs - 64,452 64,452 -Total Other 139,500 227,868 79,274 148,594TOTAL EXPENDITURES 20,384,837 20,473,205 20,571,993 (98,788)Excess (Deficiencies) of Revenues Over(Under) Expenditures $ (6,653,943) (6,728,111) (7,053,441) (325,330)(Continued)83

CITY OF LAREDO, TEXASDEBT SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALYear Ended September 30, 2011(Continued)Variance withBudgeted Amounts Final Budget -PositiveOriginal Final Actual (Negative)OTHER FINANCING SOURCES (USES):Transfers In:General Fund $ 2,000,000 2,000,000 2,000,000 -Airport 495,697 495,697 495,697 -Environmental Services 1,957,665 1,957,665 1,957,665 -Parking Meters 284,029 284,029 284,029 -Sports and Community Venue 3,114,194 3,114,194 3,114,194 -2000A C.O. Issue - - 21,970 21,9702002 C.O. Issue - - 441 441Bridge System 776,347 776,347 776,347 -Police Trust Fund 86,220 86,220 86,220 -Refunding Bonds Issued - 3,199,078 3,199,078 -Bond Premium - 178,683 178,683 -Payment to Refunded Bond Escrow Agent - (3,303,593) (3,317,933) (14,340)TOTAL OTHER FINANCINGSOURCES (USES): 8,714,152 8,788,320 8,796,391 8,071Net Change in Fund Balances 2,060,209 2,060,209 1,742,950 (317,259)Fund Balances-Beginning 6,403,892 6,529,078 6,529,078 -Fund Balances-Ending $ 8,464,101 8,589,287 8,272,028 (317,259)84

NONMAJOR GOVERNMENTAL FUNDS

NONMAJOR GOVERNMENTAL FUNDSSPECIAL REVENUE FUNDSSpecial Revenue Funds are used to account for the proceeds of specific revenue sources(other than special assessments, expendable trusts or major capital projects) that arelegally restricted to expenditures for specific purposes.Special Revenue Funds include:CDBG SPECIAL REVENUE FUND - to account for the U.S. Department of Housingand Urban Development grant and the related -disbursements for streetimprovements, drainage improvements, water and sewer improvements, publicservice, open space, code enforcement, low income housing rehabilitation and foradministration.COMMUNITY DEVELOPMENT HOUSING REHABILITATION - to account forthe U.S. Department of Housing and Urban Development grant for low incomehousing rehabilitation loans and the related disbursements.HOME INVESTMENT FUND - to account for the U. S. Department of Housing andUrban Development grant and the related disbursements for new affordablehousing units.COMMUNITY DEVELOPMENT EMERGENCY SHELTER FUND - to account forthe U.S. Department of Housing and Urban Development grant and thedisbursement of such proceeds for city shelters for the homeless.HOME INVESTMENT AFFORDABLE HOUSING – to account for the proceedsfrom the dissolution of the Laredo Affordable Housing Corporation as HOMEProgram Income to be used for the construction of the La Terraza project whichwill serve low to moderate income families.COMMNITY DEVELOPMENT AMERICAN RECOVERY ANDREINVESTMENT ACT FUND – to account for the U.S. Department ofHousing and Urban Development grant and the disbursement of such proceeds toincrease the energy efficiency of dwellings owned or occupied by low-incomefamilies, to provide assistance for homeless prevention activities, to demolish,acquire, rehabilitate, and resell foreclosed properties, and provide the necessaryfunds for the Ejido Extension project.HUD SECTION 108 – to account for the loan issued to Hamilton Housing Partners for$1.7 million.85

AUTO THEFT TASK FORCE - to account for the Texas Department of Transportationgrant for the combined effort between the City of Laredo and Webb County todetect, investigate and apprehend individuals involved in auto theft.FINANCIAL TASK FORCE - to account for the Office of National Drug Control andPrevention grant for the investigation of illegal financial activities related to drugtrafficking in the City.SPECIAL POLICE PROGRAM - to account for federal and state law enforcementgrants. Major funding sources include intergovernmental revenues from TexasDepartment of Transportation, U.S. Department of Justice and U.S. Departmentof Treasury.911 EMERGENCY COMMUNICATIONS FUND – to account for Commission onState Emergency Communications grant funds to administer and operateemergency service communications programs for Jim Hogg, Starr, Webb andZapata Counties.HEALTH FUND - to account for the rendering of public health services to City andCounty residents by administrating grants and contracts awarded by federal andstate agencies and contributions by private foundations.SPECIAL FIRE GRANTS – to account for various projects and improvements thatincrease the public safety for the citizens of Laredo. Major funding sourcesinclude State Homeland Security and Environmental Protection Agency.INTERNATIONAL AIRPORT - to account for the operation and maintenance of theCity of Laredo Airport, financed through restricted revenues from airport tenants.CIVIC CENTER - to account for rental receipts from the auditorium, ballroom, andmeeting rooms, and the disbursements for its operation and maintenance.HOTEL-MOTEL OCCUPANCY TAX - to account for tax proceeds received fromhotels and motels and the disbursement of such to promote community agenciesand projects as authorized by State statute and allocated by City Council.VETERANS FIELD - to account for revenue received from the baseball stadium and thedisbursement of such revenue restricted for the operating and maintenance costs.PUBLIC ACCESS CHANNEL - to account for the operations of City owned studiofacilities for access channels and to provide training in television production,programming and transmitting, and the related revenue associated with suchservices.86

MERCADO MANAGEMENT FUND - to account for rent revenues derived from theCity's downtown marketplace, "Mercado", and the disbursement of these fundsfor the operation and maintenance of this specialty retail center.LAREDO CONVENTION & VISITOR'S BUREAU - to account for the promotion ofthe City of Laredo. Its primary function is to engage in visitor promotion bysoliciting and servicing conventions and other related group businesses generatingtourism.RECREATION FUND - to account for the recreational activities provided to the generalpublic through various sports leagues, such as softball and basketball, and otheractivities such as swimming lessons and aerobics.PARKING METERS - to account for the collection of parking meter revenues and toenforce City ordinances on prohibited parking areas and where parking meters areinstalled.HAZARDOUS MATERIALS - to account for the issuance of license and permits, inorder to mitigate hazardous materials incidents through prevention and control.ENVIRONMENTAL SERVICES - to account for federal and state grants and thedisbursements required by the storm water regulations.KEEP LAREDO BEAUTIFUL, INC. FUND – to account for the beautification of theCity of Laredo. The corporation is organized to promote public interest in thegeneral improvement of the environment of the City of Laredo.NOISE ABATEMENT LEASE PROGRAM – to account for all the units purchasedthrough the Noise Abatement Program that are being leased out as public housingand the related operating and maintenance disbursements.SPORTS AND COMMUNITY VENUE - to account for the sales tax proceeds of ¼ ofone percent designated for payments of debt service in connection with thefinancing of a sports venue complex.LAREDO ENERGY ARENA – to account for the center’s operation. Its function is toprovide a diverse mixture of world-class entertainment.FRIENDS OF THE LIBRARY – to account for funds received from the Friends of theLibrary organization for acquisition of capital outlay for the benefit of the City ofLaredo Public Library.POLICE TRUST FUND – to account for the proceeds from seized revenues fromnarcotic operations to be used to acquire any necessary public safety equipment orimprovements that will serve to further improve the law enforcement operations.87

SUBDIVISION TRUST FUND – to account for funds received from developers and thedisbursement of such funds on subdivision streets and off-site improvements.CAPITAL PROJECTS FUNDSCapital Projects Funds are used to account for financial resources to be used for theacquisition or construction of major capital facilities other than those financed byproprietary funds and trust funds.Capital Projects Funds include:WEBB COUNTY COLONIAS PROJECT - to account for grants received from theTexas Water Development Board, the North American Development Bank, andWebb County, to provide water and sewer improvements to the communitiesoutside the City Limits.PARKS CAPITAL GRANTS - to account for various projects and improvements thatenhance the quality of life for the citizens of the City of Laredo. Major fundingsources include intergovernmental revenues from Webb County, the TexasDepartment of Transportation, and the Texas Parks and Wildlife Service, as wellas other revenue sources who dedicate funding for future recreationalimprovements.CAPITAL GRANTS - to account for the installation and activation of IntelligentTransportation Systems and for the renovation of the historic Plaza Theater’smarquee and blade sign. Major funding sources include intergovernmentalrevenues from Texas Department of Transportation and U.S. Department ofHousing and Urban DevelopmentCONTRACTUAL OBLIGATIONS - to account for contractual obligation bond andlease-purchase agreement proceeds for the purchase of equipment.CERTIFICATE OF OBLIGATION 2000 ISSUE - to account for $9,365,000 in bondproceeds for the construction of a new Municipal Court, street construction andmaintenance projects, and the acquisition, design and construction of the InnerCity Park.CERTIFICATE OF OBLIGATION 2002 ISSUE – to account for $9,925,000 in bondproceeds for the purpose of acquiring downtown property for future municipaloffices, parks, landfill, and the fire and law enforcement training center.CERTIFICATE OF OBLIGATION 2005 ISSUE – to account for $15,625,000 in bondproceeds for purpose of paying all or a portion of the City’s contractualobligations for the purpose of purchasing trucks, vehicles, and equipment forvarious departments, a communication system, improvements to the health clinic,88

acquisition of land and improvements for municipal parks, acquisition of land andimprovements to drainage projects.CERTIFICATE OF OBLIGATION 2006 ISSUE – to account for $17,320,000 in bondproceeds for purpose of paying all or a portion of the City’s contractualobligations for the purpose of constructing and equipping various departments,street and drainage improvements, and traffic equipment.CERTIFICATE OF OBLIGATION 2007 ISSUE – to account for $72,480,000 in bondproceeds for purpose of paying all or a portion of the City’s contractualobligations for the purpose of constructing and equipping various departments,street and drainage improvements, park Improvements.CERTIFICATE OF OBLIGATION 2008 ISSUE – to account for $32,000,000 in bondproceeds for purpose of paying all or a portion of the City’s contractualobligations for the purpose of constructing and equipping various departments,street and drainage improvements, and traffic equipment.CERTIFICATE OF OBLIGATION 2009 ISSUE – to account for $25,563,005 in bondproceeds for purpose of paying all or a portion of the City’s contractualobligations for the purpose of constructing and equipping various departments,street and drainage improvements, and traffic equipment.CERTIFICATE OF OBLIGATION 2010 ISSUE – to account for $10,244,797 in bondproceeds for purpose of paying all or a portion of the City’s contractualobligations for the purpose of constructing and equipping various departments,street and drainage improvements, and traffic equipment.BASEBALL STADIUM FUND - to account for the construction of the City’s newbaseball stadium. Major funding sources include funds used from the Sports andCommunity Venue Fund and $10,385,250 from the 2011 Bond proceeds.AIRPORT CONSTRUCTION FUND - to account for the Federal AviationAdministration, the Texas Department of Transportation, and U.S. Department ofTransportation grants for the engineering design and construction of runway andtaxiway improvements and promote air service.CAPITAL IMPROVEMENTS - to account for capital improvement projects approvedby City Council. Its major funding sources are revenues received from the BridgeSystem, General Fund, and interest earnings.PERMANENT FUNDCANSECO ENDOWMENT FUND – to account for funds received from the CansecoEndowment Foundation for the benefit of the City of Laredo Public Library.89

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETSeptember 30, 2011SPECIAL REVENUEHOME INV.BLOCK HOUSING HOME EMERGENCY AFFORDABLEGRANTS REHAB INVESTMENT SHELTER HOUSINGASSETSCash and Cash Equivalents:Cash $ 100 - - - -Cash with Fiscal Agent - - - - -Investments - 26,035 43,291 - 1,171,720Receivables, net of allowances:Accrued Interest - 28 47 - 1,266Hotel-Motel Tax, Penalty and Interest - - - - -Accounts 2,671 - - - -Notes - 1,726,928 12,203,643 - -Due From Other Funds - - - - -Due From Other Governments 283,471 - 4,256 16,586 -Inventory - - - - -TOTAL ASSETS 286,242 1,752,991 12,251,237 16,586 1,172,986LIABILITIES AND FUND BALANCESLiabilities:Accounts Payable 8,962 16 912 2,928 69Retainage Payable 72,629 - - - -Accrued Wages and Employee Benefits 35,604 685 2,879 - -Contracts Payable 151,600 - - - -Customer Deposits - - - - -Due To Other Funds 14,627 - - 13,658 -Due To Other Governments - - - - -Due To Developers - - - - -Deferred Revenue 2,665 1,726,928 12,203,643 - -TOTAL LIABILITIES 286,087 1,727,629 12,207,434 16,586 69Fund Balances:Nonspendable - - - - -Restricted 155 25,362 43,803 - 1,172,917Committed - - - - -Assigned - - - - -Unassigned (Deficit) - - - - -TOTAL FUND BALANCES 155 25,362 43,803 - 1,172,917TOTAL LIABILITIES AND FUND BALANCES $ 286,242 1,752,991 12,251,237 16,586 1,172,98690

(Continued)SPECIAL REVENUECOMMUNITY AUTO FINANCIAL SPECIAL 911DEV. H.U.D. THEFT TASK POLICE EMERGENCY HEALTHARRA SEC. 108 TASK FORCE FORCE PROGRAM COMM. FUND FUND- - - 5,000 - 100 3,200- - - - - - -- - 260,557 1,441,102 - 58,177 -- 1,370,589 281 1,557 - 63 -- - - - - - -1,095 - - 2,862 - - 731- 765,000 - - - - -- - - - - - -673,588 - 82,098 175,489 320,690 23,133 2,007,831- - - - - - 1,593674,683 2,135,589 342,936 1,626,010 320,690 81,473 2,013,35542,266 - 10,011 14,636 14,643 52,338 302,243- - - - - - -9,195 - 20,131 16,840 48,986 8,511 343,754- - - - - - -- - - - - - -623,222 - - - 241,367 - 450,640- - 10,163 78,741 - - -- - - - - - -- 2,135,589 - - 2,228 19,917 259,478674,683 2,135,589 40,305 110,217 307,224 80,766 1,356,115- - - - - - 1,593- - 302,631 1,515,793 13,466 707 10,240- - - - - - 635,317- - - - - - 10,090- - - - - - -- - 302,631 1,515,793 13,466 707 657,240674,683 2,135,589 342,936 1,626,010 320,690 81,473 2,013,355(Continued)91

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETSeptember 30, 2011(Continued)SPECIAL REVENUESPECIALHOTEL/MOTELFIRE INT'L. CIVIC OCCUPANCY VETERANSGRANTS AIRPORT CENTER TAX FIELDASSETSCash and Cash Equivalents:Cash $ - 200 900 - -Cash with Fiscal Agent - - - - -Investments - 180,761 93,758 1,786,871 -Receivables, net of allowances:Accrued Interest - 195 101 1,930 -Hotel-Motel Tax, Penalty and Interest - - - 46,824 -Accounts - 245,657 60 - -Notes - - - - -Due From Other Funds - - - - -Due From Other Governments 201,221 53,540 - - -Inventory - - - - -TOTAL ASSETS 201,221 480,353 94,819 1,835,625 -LIABILITIES AND FUND BALANCESLiabilities:Accounts Payable 1 74,689 26,681 52,637 5,175Retainage Payable - - - - -Accrued Wages and Employee Benefits 116,392 73,095 23,293 - 125Contracts Payable - - - - -Customer Deposits - 34,540 28,914 - -Due To Other Funds 63,748 - - - 32,941Due To Other Governments - 899 - - -Due To Developers - - - - -Deferred Revenue - 128,428 - 46,844 -TOTAL LIABILITIES 180,141 311,651 78,888 99,481 38,241Fund Balances:Nonspendable - - - - -Restricted 21,080 168,702 - 1,736,144 -Committed - - 15,931 - -Assigned - - - - -Unassigned (Deficit) - - - - (38,241)TOTAL FUND BALANCES 21,080 168,702 15,931 1,736,144 (38,241)TOTAL LIABILITIES AND FUND BALANCES $ 201,221 480,353 94,819 1,835,625 -(Continued)92

(Continued)SPECIAL REVENUEPUBLICLAREDOACCESS MERCADO CONVENT. & RECREATION PARKING HAZARDOUS ENVIRONMENTALCHANNEL MGMT. VISITORS FUND METERS MATERIALS SERVICES- - 850 - 825 - 350- - - - - - -472,853 238,873 206,199 324,648 852,612 30,594 3,954,327511 258 223 351 921 33 4,271- - - - - - -66,409 6,283 617 - 666,294 - 294,407- - - - - - 64,820- - - - - - -- - - - - - 370,234- - - - - - -539,773 245,414 207,889 324,999 1,520,652 30,627 4,688,40923,894 6,789 81,090 43,509 55,173 61 144,867- - - - - - 138,15312,918 3,624 21,823 - 37,415 6,272 62,212- - - - - - 116,272- - - - - - -- - - - - - 2,950- - 67 - - - -- - - - - - -- - - - 714,030 - 71,14336,812 10,413 102,980 43,509 806,618 6,333 535,597- - - - - - -289,532 - 104,909 - - - -213,429 11,261 - 34,281 56,653 24,294 3,380,195- 223,740 - 247,209 657,381 - 772,617- - - - - - -502,961 235,001 104,909 281,490 714,034 24,294 4,152,812539,773 245,414 207,889 324,999 1,520,652 30,627 4,688,409(Continued)93

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETSeptember 30, 2011(Continued)SPECIAL REVENUEKEEP NOISE ABATE. SPORTS & LAREDO FRIENDSLAREDO LEASE COMMUNITY ENERGY OF THEBEAUTIFUL PROGRAM VENUE ARENA LIBRARYASSETSCash and Cash Equivalents:Cash $ - - - 24,121 -Cash with Fiscal Agent - - - 448,785 -Investments 5,557 1,148,048 19,386,687 - 121,831Receivables, net of allowances:Accrued Interest 6 1,240 16,784 - 132Hotel-Motel Tax, Penalty and Interest - - - - -Accounts - 39,341 - 414,596 2,130Notes - - - - -Due From Other Funds 2,950 - - - -Due From Other Governments - - - - -Inventory - - - 67,568 -TOTAL ASSETS 8,513 1,188,629 19,403,471 955,070 124,093LIABILITIES AND FUND BALANCESLiabilities:Accounts Payable 4,893 24,247 15,541 465,384 7,973Retainage Payable - - - - -Accrued Wages and Employee Benefits 2,626 9,150 - - -Contracts Payable - - - - -Customer Deposits - 92,270 - - -Due To Other Funds - - - - -Due To Other Governments - - - - 2,130Due To Developers - - - - -Deferred Revenue - 12,012 - 509,618 337TOTAL LIABILITIES 7,519 137,679 15,541 975,002 10,440Fund Balances:Nonspendable - - - 67,568 -Restricted - 1,050,950 19,387,930 - 337Committed 994 - - - 838Assigned - - - - 112,478Unassigned (Deficit) - - - (87,500) -TOTAL FUND BALANCES 994 1,050,950 19,387,930 (19,932) 113,653TOTAL LIABILITIES AND FUND BALANCES $ 8,513 1,188,629 19,403,471 955,070 124,093(Continued)94

(Continued)SPECIAL REVENUECAPITAL PROJECTSWEBBCERTIFICATEPOLICE SUBDIVISION COUNTY PARKS OFTRUST TRUST COLONIAS CAPITAL CAPITAL CONTRACTUAL OBLIGATIONFUND FUND PROJECT GRANTS GRANTS OBLIGATIONS 00 ISSUE- - - - - - -- - - - - - -5,327,899 336,849 480,013 109,640 - 822,152 -5,755 364 518 118 - - -- - - - - - -3,765 - - - - - -- - - - - - -- - - - - - -- - 215,566 81,092 954,224 - -- - - - - - -5,337,419 337,213 696,097 190,850 954,224 822,152 -116,307 26 35 4 118,800 14,828 -- - 21,899 30,309 80,967 - -- - 2,231 - - - -- - 123,470 7,134 21,166 - -- - - - - - -- - - - 733,291 - -- - - - - - -- 337,187 - - - - -- - - - - - -116,307 337,213 147,635 37,447 954,224 14,828 -- - - - - - -5,221,112 - 548,462 153,403 - 807,324 -- - - - - - -- - - - - - -- - - - - - -5,221,112 - 548,462 153,403 - 807,324 -5,337,419 337,213 696,097 190,850 954,224 822,152 -(Continued)95

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING BALANCE SHEETSeptember 30, 2011(Continued)CAPITAL PROJECTSCERTIFICATE CERTIFICATE CERTIFICATE CERTIFICATE CERTIFICATEOF OF OF OF OFOBLIGATION OBLIGATION OBLIGATION OBLIGATION OBLIGATION02 ISSUE 05 ISSUE 06 ISSUE 07 ISSUE 08 ISSUEASSETSCash and Cash Equivalents:Cash $ - - - - -Cash with Fiscal Agent - - - - -Investments - 371,163 1,319,559 12,840,821 13,020,193Receivables, net of allowances:Accrued Interest - - - 2,412 3,038Hotel-Motel Tax, Penalty and Interest - - - - -Accounts - - - 35,858 -Notes - - - - -Due From Other Funds - - - - -Due From Other Governments - - - - -Inventory - - - - -TOTAL ASSETS - 371,163 1,319,559 12,879,091 13,023,231LIABILITIES AND FUND BALANCESLiabilities:Accounts Payable - 8 70,134 247,257 5,786Retainage Payable - 2,358 120,311 375,294 472,723Accrued Wages and Employee Benefits - - 21,146 8,059 1,028Contracts Payable - 1,860 117,011 668,959 254,919Customer Deposits - - - - -Due To Other Funds - - 37,116 954,279 2,272Due To Other Governments - - - - -Due To Developers - - - - -Deferred Revenue - - - - -TOTAL LIABILITIES - 4,226 365,718 2,253,848 736,728Fund Balances:Nonspendable - - - - -Restricted - 366,937 953,841 10,625,243 12,286,503Committed - - - - -Assigned - - - - -Unassigned (Deficit) - - - - -TOTAL FUND BALANCES - 366,937 953,841 10,625,243 12,286,503TOTAL LIABILITIES AND FUND BALANCES $ - 371,163 1,319,559 12,879,091 13,023,231(Continued)96

CAPITAL PROJECTSPERMANENTFUND(Continued)CERTIFICATE CERTIFICATE TOTALOF OF BASEBALL AIRPORT CANSECO NONMAJOROBLIGATION OBLIGATION STADIUM CONSTRUCTION CAPITAL ENDOWMENT GOVERNMENTAL09 ISSUE 10 ISSUE FUND FUND IMPROVEMENT FUND FUNDS- - - - - - 35,646- - - - - - 448,78516,056,673 4,894,499 15,399,528 5,355,391 12,800,175 72,293 121,011,34916,508 2,147 5,791 525 13,826 78 1,451,867- - - - - - 46,824- - - 1,989 - - 1,784,765- - - - - - 14,760,391- - - - - - 2,950- - - 1,024,793 55,483 - 6,543,295- - - - - - 69,16116,073,181 4,896,646 15,405,319 6,382,698 12,869,484 72,371 146,155,033155,017 14,849 4 179,478 150,956 6 2,555,123350,000 6,867 75,367 534,396 62,922 - 2,344,19515,401 - - 6,966 6,196 - 916,557979,995 85,824 944,341 323,639 348,281 - 4,144,471- - - - - - 155,7241,694 - - - - - 3,171,805- - - - - - 92,000- - - - - - 337,187- - - - 157,967 - 17,990,8271,502,107 107,540 1,019,712 1,044,479 726,322 6 31,707,889- - - - - 50,000 119,16114,571,074 4,789,106 14,385,607 5,338,219 73,967 22,365 95,987,821- - - - 2,383,377 - 6,756,570- - - - 9,685,818 - 11,709,333- - - - - - (125,741)14,571,074 4,789,106 14,385,607 5,338,219 12,143,162 72,365 114,447,14416,073,181 4,896,646 15,405,319 6,382,698 12,869,484 72,371 146,155,03397

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCESYear ended September 30, 2011SPECIAL REVENUEAUTOBLOCK HOUSING HOME EMERGENCY THEFTGRANTS REHAB INVESTMENT SHELTER TASK FORCEREVENUES:Taxes $ - - - - -Licenses and Permits - - - - -Intergovernmental:Federal 3,808,599 - 445,616 135,721 -State - - - - 428,110Other - - - - 43,000Charges for Services - - - - -Fines - - - - -Fees and Collections - - - - -Investment Income:Interest Earnings - - 76 - 717Rents and Royalties - - - - -Discount Earnings - - - - -Miscellaneous:Local Contributions - - - - -Reimbursements 105,245 74,690 33,710 - -Other - - - - -TOTAL REVENUES 3,913,844 74,690 479,402 135,721 471,827EXPENDITURES:Public Safety 413,000 - - - 716,632Public Works - - - - -Health and Welfare 502,860 38,746 563,663 135,721 -Cultural and Recreational 1,614,342 - - - -General Government 758,361 29,125 - - -Air Transportation Services - - - - -Total Operating Expenditures 3,288,563 67,871 563,663 135,721 716,632Debt Service:Principal - - - - -Interest - - - - -Capital Outlay 625,281 - - - -TOTAL EXPENDITURES 3,913,844 67,871 563,663 135,721 716,632Excess (Deficiency) of Revenues OverExpenditures - 6,819 (84,261) - (244,805)OTHER FINANCING SOURCES (USES):Transfers In - - 72,261 - 235,507Proceeds - Long Term Debt - - - - -Bond Premiums - - - - -Bond Costs - - - - -Transfers Out - - - - -Capital Leases - - - - -Sale of Assets - - - - -TOTAL OTHER FINANCINGSOURCES (USES) - - 72,261 - 235,507Net Change in Fund Balance - 6,819 (12,000) - (9,298)Fund Balances at Beginning of Year 155 18,543 55,803 - 311,929FUND BALANCE AT END OF YEAR $ 155 25,362 43,803 - 302,631(Continued)98

(Continued)SPECIAL REVENUEFINANCIAL SPECIAL HOTEL/MOTELTASK HEALTH POLICE INT'L. CIVIC OCCUPANCYFORCE FUND PROGRAM AIRPORT CENTER TAX- - - - - 4,055,510- 382,523 - - - -916,890 181,829 1,245,923 69,880 - -- 8,374,234 449,000 2,924 - -- 1,005,532 - - - -- - - - - -- - - - - -- 729,230 - 11,825 - 844,418 - 144 2,775 107 6,040- 2,002 - 4,129,984 232,162 -- - - - 19 -- 48,983 - - - -14,120 32,222 - 444,628 154 100408,911 574,201 - - - -1,344,339 11,330,756 1,695,067 4,662,016 232,442 4,061,734744,305 - 1,576,876 - - -- - - - - -- 13,730,071 - - - -- - - - 780,559 492,063- - - - - -- - - 4,651,685 - -744,305 13,730,071 1,576,876 4,651,685 780,559 492,063- - - - - -- - - - - -247,491 623,323 169,483 70,491 - -991,796 14,353,394 1,746,359 4,722,176 780,559 492,063352,543 (3,022,638) (51,292) (60,160) (548,117) 3,569,671- 3,058,484 50,401 - 518,949 -- - - - - -- - - - - -- - - - - -- - - (542,983) - (2,560,022)- - - - - -- - - 18,314 - -- 3,058,484 50,401 (524,669) 518,949 (2,560,022)352,543 35,846 (891) (584,829) (29,168) 1,009,6491,163,250 621,394 14,357 753,531 45,099 726,4951,515,793 657,240 13,466 168,702 15,931 1,736,144(Continued)99

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCESYear ended September 30, 2011(Continued)SPECIAL REVENUEPUBLICVETERANS ACCESS MERCADO RECREATION ENVIRO.FIELD CHANNEL MGMT. FUND SERVICESREVENUES:Taxes $ - - - - -Licenses and Permits - - - - -Intergovernmental:Federal - - - - 1,614,471State - - - - 370,342Other - - - - 10,333Charges for Services - 22,813 - - 6,153,134Fines - - - - -Fees and Collections - 267,434 - 213,421 -Investment Income:Interest Earnings 12 1,542 1,054 1,087 18,951Rents and Royalties 2,976 - 118,045 - -Discount Earnings - 9 - - 1,512Miscellaneous:Local Contributions - - - - -Reimbursements - - - 500 19,983Other - - - - -TOTAL REVENUES 2,988 291,798 119,099 215,008 8,188,726EXPENDITURES:Public Safety - - - - -Public Works - - - - -Health and Welfare - - - - 3,580,902Cultural and Recreational 92,475 431,524 123,694 124,774 -General Government - - - - -Air Transportation Services - - - - -Total Operating Expenditures 92,475 431,524 123,694 124,774 3,580,902Debt Service:Principal - - - - -Interest - - - - -Capital Outlay - 157,160 - - 4,105,858TOTAL EXPENDITURES 92,475 588,684 123,694 124,774 7,686,760Excess (Deficiency) of Revenues OverExpenditures (89,487) (296,886) (4,595) 90,234 501,966OTHER FINANCING SOURCES (USES):Transfers In - 410,527 - - 2,166,552Proceeds - Long Term Debt - - - - -Bond Premiums - - - - -Bond Costs - - - - -Transfers Out - - - - (2,056,712)Capital Leases - - - - -Sale of Assets - - - - -TOTAL OTHER FINANCINGSOURCES (USES) - 410,527 - - 109,840Net Change in Fund Balance (89,487) 113,641 (4,595) 90,234 611,806Fund Balances at Beginning of Year 51,246 389,320 239,596 191,256 3,541,006FUND BALANCE AT END OF YEAR $ (38,241) 502,961 235,001 281,490 4,152,812(Continued)100

(Continued)SPECIAL REVENUELAREDO SPORTS & NOISE ABATE. 911 REGIONALCONVENT. & PARKING HAZARDOUS COMMUNITY LEASE COMM.VISITORS METERS MATERIALS VENUE PROGRAM FUND- - - 6,733,805 - -- 5,424 304,600 - - -- 8,823 - - - -- - - - - 1,054,383- - - - - -- - - - - -- 514,066 - - - -12,108 1,482,929 - - 39,775 -38 6,060 86 109,679 3,814 707- - - - 1,245,863 -- - - - - -- - - 150,000 - -145,031 904 25 - 8,184 -- - - - - -157,177 2,018,206 304,711 6,993,484 1,297,636 1,055,090- 1,325,054 186,250 - - 1,013,963- - - - - -- - - - 762,792 -1,990,826 - - 232,730 - -- - - - - -- - - - - -1,990,826 1,325,054 186,250 232,730 762,792 1,013,963- - - - - -- - - - - -57,445 47,783 - 52,688 - 40,4202,048,271 1,372,837 186,250 285,418 762,792 1,054,383(1,891,094) 645,369 118,461 6,708,066 534,844 7071,927,295 - - - - -- - - - - -- - - - - -- - - - - -- (1,284,029) (121,113) (11,052,728) - -- - - - - -- - - - - -1,927,295 (1,284,029) (121,113) (11,052,728) - -36,201 (638,660) (2,652) (4,344,662) 534,844 70768,708 1,352,694 26,946 23,732,592 516,106 -104,909 714,034 24,294 19,387,930 1,050,950 707(Continued)101

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCESYear ended September 30, 2011(Continued)SPECIAL REVENUEKEEP LAREDO SPECIAL LAREDO COMMUNITY HOME INV.BEAUTIFUL, FIRE ENERGY DEV. AFFORDABLEINC. FUND GRANTS ARENA ARRA HOUSINGREVENUES:Taxes $ - - - - -Licenses and Permits - - - - -Intergovernmental:Federal - 444,704 - 1,878,314 -State - - - - -Other - - - - -Charges for Services - - 3,491,106 - -Fines - - - - -Fees and Collections - - - - -Investment Income:Interest Earnings 13,267 8 - - 707Rents and Royalties - - - - -Discount Earnings - - - - -Miscellaneous:Local Contributions 9 - - - -Reimbursements - - - - 1,251,455Other - - - - -TOTAL REVENUES 13,276 444,712 3,491,106 1,878,314 1,252,162EXPENDITURES:Public Safety - 1,534,964 - - -Public Works 121,076 - - - -Health and Welfare - - - - 6,984Cultural and Recreational - - 4,390,559 1,878,314 -General Government - - - - -Air Transportation Services - - - - -Total Operating Expenditures 121,076 1,534,964 4,390,559 1,878,314 6,984Debt Service:Principal - - - - -Interest - - - - -Capital Outlay - - - - -TOTAL EXPENDITURES 121,076 1,534,964 4,390,559 1,878,314 6,984Excess (Deficiency) of Revenues OverExpenditures (107,800) (1,090,252) (899,453) - 1,245,178OTHER FINANCING SOURCES (USES):Transfers In 99,047 1,090,260 938,534 - -Proceeds - Long Term Debt - - - - -Bond Premiums - - - - -Bond Costs - - - - -Transfers Out - - - - (72,261)Capital Leases - - - - -Sale of Assets - - - - -TOTAL OTHER FINANCINGSOURCES (USES) 99,047 1,090,260 938,534 - (72,261)Net Change in Fund Balance (8,753) 8 39,081 - 1,172,917Fund Balances at Beginning of Year 9,747 21,072 (59,013) - -FUND BALANCE AT END OF YEAR $ 994 21,080 (19,932) - 1,172,917(Continued)102

(Continued)SPECIAL REVENUECAPTIAL PROJECTSFRIENDS SUBDIVISION POLICE AIRPORTOF THE TRUST TRUST CONTRACTUAL CAPITAL CONSTRUCTIONLIBRARY FUND FUND OBLIGATIONS IMPROVEMENT FUND- - - - - -- - - - - -296,902 - - - 35,880 15,222,80434,928 - - - 214,385 47,286- - 100 - - -- - - - - -- - - - - -- - - - - -630 - 24,155 2,160 48,890 10,814- - - - - -- - - - 450 -- - - - 509,750 -- - 99,181 - - -100 - 2,631,778 4,377 12,037 101,679332,560 - 2,755,214 6,537 821,392 15,382,583- - 742,504 - - -- - - 170,052 619,242 1,517,445- - - - - -349,588 - - - - -- - - - - -- - - - - -349,588 - 742,504 170,052 619,242 1,517,445- - 570,009 - - -- - 50,550 - - -- - 3,351,542 711,898 4,743,214 16,424,697349,588 - 4,714,605 881,950 5,362,456 17,942,142(17,028) - (1,959,391) (875,413) (4,541,064) (2,559,559)- - - - 8,816,905 47,286- - - - - -- - - - - -- - - - - -- - (86,220) (288) (4,010,299) -- - 807,653 - - -- - - - - 1,230,332- - 721,433 (288) 4,806,606 1,277,618(17,028) - (1,237,958) (875,701) 265,542 (1,281,941)130,681 - 6,459,070 1,683,025 11,877,620 6,620,160113,653 - 5,221,112 807,324 12,143,162 5,338,219(Continued)103

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCESYear ended September 30, 2011(Continued)CAPITAL PROJECTSCERTIFICATE WEBB CERTIFICATEOF COUNTY OF PARKSOBLIGATION COLONIAS OBLIGATION CAPITAL CAPITAL00 ISSUE PROJECT 02 ISSUE GRANTS GRANTSREVENUES: $Taxes - - - - -Licenses and Permits - - - - -Intergovernmental:Federal - - - - -State - 422,198 - 916,973 8,491,494Other - - - - -Charges for Services - - - - -Fines - - - - -Fees and Collections - - - - -Investment Income:Interest Earnings 58 2,020 898 222 -Rents and Royalties - - - - -Discount Earnings - - - - -Miscellaneous:Local Contributions - - - - -Reimbursements - - - - -Other - - - - -TOTAL REVENUES 58 424,218 898 917,195 8,491,494EXPENDITURES:Public Safety - - - - -Public Works 5 422,198 73 - -Health and Welfare - - - - -Cultural and Recreational - - - - -General Government - - - - -Air Transportation Services - - - - -Total Operating Expenditures 5 422,198 73 - -Debt Service:Principal - - - - -Interest - - - - -Capital Outlay 33,285 - 812,810 946,614 9,061,957TOTAL EXPENDITURES 33,290 422,198 812,883 946,614 9,061,957Excess (Deficiency) of Revenues OverExpenditures (33,232) 2,020 (811,985) (29,419) (570,463)OTHER FINANCING SOURCES (USES):Transfers In - - - 29,641 570,463Proceeds - Long Term Debt - - - - -Bond Premiums - - - - -Bond Costs - - - - -Transfers Out (21,971) - (441) - -Capital Leases - - - - -Sale of Assets - - - - -TOTAL OTHER FINANCINGSOURCES (USES) (21,971) - (441) 29,641 570,463Net Change in Fund Balance (55,203) 2,020 (812,426) 222 -Fund Balances at Beginning of Year 55,203 546,442 812,426 153,181 -FUND BALANCE AT END OF YEAR $ - 548,462 - 153,403 -(Continued)104

(Continued)CAPITAL PROJECTSCERTIFICATE CERTIFICATE CERTIFICATE CERTIFICATE CERTIFICATEOF OF OF OF OF BASEBALLOBLIGATION OBLIGATION OBLIGATION OBLIGATION OBLIGATION STADIUM05 ISSUE 06 ISSUE 07 ISSUE 08 ISSUE 09 ISSUE FUND- - - - - -- - - - - -- - - - - -- - - - - -- - - - - -- - - - - -- - - - - -- - - - - -567 3,327 56,961 51,987 41,872 38,102- - - - - -- - - - - -- - 493,381 - - -- - - - - -- 23 2,641 196,883 5,617 -567 3,350 552,983 248,870 47,489 38,102- - - - - -48 296 73,409 207,816 3,693 -- - - - - -- - - - - -- - - - - -- - - - - -48 296 73,409 207,816 3,693 -- - - - - -- - - - - -101,012 2,106,257 10,728,636 6,700,342 9,569,420 2,652,495101,060 2,106,553 10,802,045 6,908,158 9,573,113 2,652,495(100,493) (2,103,203) (10,249,062) (6,659,288) (9,525,624) (2,614,393)- - 750,000 1,500,000 2,000,000 7,000,000- - - - - 10,445,000- - - - - -- - - - - (445,000)- (29,153) (2,465,803) (30,038) - -- - - - - -- - - - - -- (29,153) (1,715,803) 1,469,962 2,000,000 17,000,000(100,493) (2,132,356) (11,964,865) (5,189,326) (7,525,624) 14,385,607467,430 3,086,197 22,590,108 17,475,829 22,096,698 -366,937 953,841 10,625,243 12,286,503 14,571,074 14,385,607(Continued)105

CITY OF LAREDO, TEXASNONMAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCESYear ended September 30, 2011(Continued)CAPTIAL PERMANENTPROJECTSFUNDCERTIFICATETOTALOF CANSECO NONMAJOROBLIGATION ENDOWMENT GOVERNMENTAL10 ISSUE FUND FUNDSREVENUES: $Taxes - - 10,789,315Licenses and Permits - - 692,547Intergovernmental:Federal - - 26,306,356State - - 20,806,257Other - - 1,058,965Charges for Services - - 9,667,053Fines - - 514,066Fees and Collections - - 2,756,806Investment Income:Interest Earnings 56,737 285 510,974Rents and Royalties - - 5,731,032Discount Earnings - - 1,990Miscellaneous:Local Contributions - - 1,202,123Reimbursements 11,903 - 2,242,035Other - - 3,938,247TOTAL REVENUES 68,640 285 86,217,766EXPENDITURES:Public Safety - - 8,253,548Public Works 654 - 3,136,007Health and Welfare - - 19,321,739Cultural and Recreational - - 12,501,448General Government - - 787,486Air Transportation Services - - 4,651,685Total Operating Expenditures 654 - 48,651,913Debt Service:Principal - - 570,009Interest - - 50,550Capital Outlay 278,880 - 74,420,482TOTAL EXPENDITURES 279,534 - 123,692,954Excess (Deficiency) of Revenues OverExpenditures (210,894) 285 (37,475,188)OTHER FINANCING SOURCES (USES):Transfers In - - 31,282,112Proceeds - Long Term Debt 9,545,000 - 19,990,000Bond Premiums 650,403 - 650,403Bond Costs (195,403) - (640,403)Transfers Out (5,000,000) - (29,334,061)Capital Leases - - 807,653Sale of Assets - - 1,248,646TOTAL OTHER FINANCINGSOURCES (USES) 5,000,000 - 24,004,350Net Change in Fund Balance 4,789,106 285 (13,470,838)Fund Balances at Beginning of Year - 72,080 127,917,982FUND BALANCE AT END OF YEAR $ 4,789,106 72,365 114,447,144106

CITY OF LAREDO, TEXASCDBG SPECIAL REVENUE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:CDBG Grants $ 27,881,467 3,808,599 31,690,066 36,046,206Miscellaneous:Reimbursements 753,861 105,245 859,106 835,954TOTAL REVENUES 28,635,328 3,913,844 32,549,172 36,882,160EXPENDITURES:Public Safety 2,965,330 413,000 3,378,330 3,456,908Public Works 1,351,349 - 1,351,349 1,701,457Health and Welfare 4,617,566 502,860 5,120,426 5,547,920Cultural and Recreational 2,576,439 1,614,342 4,190,781 4,391,947General Government 6,249,785 758,361 7,008,146 7,124,291Capital Outlay 11,008,417 625,281 11,633,698 14,804,099TOTAL EXPENDITURES 28,768,886 3,913,844 32,682,730 37,026,622Excess (Deficiency) of RevenuesOver (Under) Expenditures (133,558) - (133,558) (144,462)OTHER FINANCING SOURCES (USES):Transfer In:General Fund 133,713 - 133,713 144,462-TOTAL OTHER FINANCING SOURCES: 133,713 - 133,713 144,462Net Change in Fund Balances $ 155 - 155 -Fund Balances-Beginning 155Fund Balances-Ending $ 155107

CITY OF LAREDO, TEXASHOUSING REHABILITATIONSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Investment Income:Interest Earnings $ 100 100 - - - (100)Miscellaneous:Reimbursements 70,000 70,000 74,690 - 74,690 4,690TOTAL REVENUES 70,100 70,100 74,690 - 74,690 4,590EXPENDITURES:Administration:Personnel Services 40,493 40,493 29,125 - 29,125 11,368Contractual Services 38,803 38,803 38,746 - 38,746 57Total Administration 79,296 79,296 67,871 - 67,871 11,425TOTAL EXPENDITURES 79,296 79,296 67,871 - 67,871 11,425Excess (Deficiency) of Revenues OverExpenditures (9,196) (9,196) 6,819 - 6,819 16,015Fund Balances at Beginning of Year 9,196 18,543 18,543 - 18,543 -FUND BALANCE AT END OF YEAR $ - 9,347 25,362 - 25,362 16,015108

CITY OF LAREDO, TEXASHOME INVESTMENT FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:HOME Grants $ 2,060,162 445,616 2,505,778 4,019,663Investment Income:Interest Earnings 2,507 76 2,583 2,513Miscellaneous:Reimbursements 548,790 33,710 582,500 524,387TOTAL REVENUES 2,611,459 479,402 3,090,861 4,546,563EXPENDITURES:Personnel Services 224,039 89,656 313,695 348,850Materials and Supplies 5,042 2,386 7,428 7,459Contractual Services 2,326,575 471,621 2,798,196 4,190,254TOTAL EXPENDITURES 2,555,656 563,663 3,119,319 4,546,563Excess (Deficiency) of RevenuesOver (Under) Expenditures 55,803 (84,261) (28,458) -OTHER FINANCING SOURCES (USES):Transfer In:Home Inv. Afford. Housing - 72,261 72,261 -TOTAL OTHER FINANCING SOURCES: - 72,261 72,261 -Net Change in Fund Balances $ 55,803 (12,000) 43,803 -Fund Balances-Beginning 55,803Fund Balances-Ending $ 43,803109

CITY OF LAREDO, TEXASEMERGENCY SHELTER FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:Emergency Shelter Grants $ 290,794 135,721 426,515 479,378TOTAL REVENUES 290,794 135,721 426,515 479,378EXPENDITURES:Materials and Supplies 2,061 1,100 3,161 4,158Contractual Services 288,733 134,621 423,354 475,220TOTAL EXPENDITURES 290,794 135,721 426,515 479,378Excess (Deficiency) of RevenuesOver (Under) Expenditures $ - - - -Fund Balances-Beginning -Fund Balances-Ending $ -110

CITY OF LAREDO, TEXASHOME INVESTMENT AFFORDABLE HOUSINGSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ - 707 707 -Miscellaneous:Reimbursements - 1,251,455 1,251,455 1,251,455TOTAL REVENUES - 1,252,162 1,252,162 1,251,455EXPENDITURES:Contractual Services - 69 69 -Other - 6,915 6,915 51,455Capital Outlay - - - 1,200,000TOTAL EXPENDITURES - 6,984 6,984 1,251,455Excess (Deficiency) of RevenuesOver (Under) Expenditures - 1,245,178 1,245,178 -OTHER FINANCING SOURCES (USES):Transfer Out:Home Investment Fund - (72,261) (72,261) -TOTAL OTHER FINANCING SOURCES: - (72,261) (72,261) -Net Change in Fund Balances $ - 1,172,917 1,172,917 -Fund Balances-Beginning -Fund Balances-Ending $ 1,172,917111

CITY OF LAREDO, TEXASCOMMUNITY DEVELOPMENT ARRASCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:Weatherization Assistance $ 277,273 584,085 861,358 3,395,441Neighborhood Assistance 766,949 675,080 1,442,029 2,127,102CDBG Assistance 975,026 - 975,026 975,026HPRP 707,103 619,149 1,326,252 1,490,976TOTAL REVENUES 2,726,351 1,878,314 4,604,665 7,988,545EXPENDITURES:Personnel Services 168,072 241,823 409,895 489,359Materials and Supplies 42,931 18,892 61,823 70,816Contractual Services 1,540,322 1,617,599 3,157,921 4,537,604Other - - - 1,915,740Capital Outlay 975,026 - 975,026 975,026TOTAL EXPENDITURES 2,726,351 1,878,314 4,604,665 7,988,545Net Change in Fund Balances $ - - - -Fund Balances-Beginning -Fund Balances-Ending $ -112

CITY OF LAREDO, TEXASAUTO THEFT TASK FORCESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:State $ 433,000 829,700 428,110 - 428,110 (401,590)Other 45,000 79,417 43,000 - 43,000 (36,417)Investment Income:Interest Earnings 1,200 - 717 - 717 717TOTAL REVENUES 479,200 909,117 471,827 - 471,827 (437,290)EXPENDITURES:Personnel Services 526,165 1,134,859 590,980 - 590,980 543,879Materials and Supplies 12,000 13,638 6,237 1,269 7,506 6,132Contractual Services 134,000 240,339 119,415 - 119,415 120,924Other 102,835 6,794 - - - 6,794Total Operating Expenditures 775,000 1,395,630 716,632 1,269 717,901 677,729Capital Outlay - - - - - -TOTAL EXPENDITURES 775,000 1,395,630 716,632 1,269 717,901 677,729Excess (Deficiency) of Revenues OverExpenditures (295,800) (486,513) (244,805) (1,269) (246,074) 240,439OTHER FINANCING SOURCES (USES):Transfer In:General Fund 241,646 235,507 235,507 - 235,507 -TOTAL OTHER FINANCINGSOURCES (USES) 241,646 235,507 235,507 - 235,507 -Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (54,154) (251,006) (9,298) (1,269) (10,567) 240,439Fund Balances at Beginning of Year 54,154 311,929 311,929 - 311,929 -FUND BALANCES AT END OF YEAR $ - 60,923 302,631 (1,269) 301,362 240,439113

CITY OF LAREDO, TEXASFINANCIAL TASK FORCESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:Federal $ 908,754 1,664,727 916,890 - 916,890 (747,837)Investment Income:Interest Earnings 2,500 2,500 4,418 - 4,418 1,918Miscellaneous:Reimbursements - - 14,120 - 14,120 14,120Forfeitures 320,000 320,000 408,911 - 408,911 88,911TOTAL REVENUES 1,231,254 1,987,227 1,344,339 - 1,344,339 (642,888)EXPENDITURES:Personnel Services 726,076 1,211,272 623,993 - 623,993 587,279Material and Supplies 40,660 50,606 18,573 1,500 20,073 30,533Contractual Services 92,696 142,429 101,739 2,980 104,719 37,710Other 150,000 96,227 - - - 96,227Total Operating Expenditures 1,009,432 1,500,534 744,305 4,480 748,785 751,749Capital Outlay - 264,871 247,491 - 247,491 17,380TOTAL EXPENDITURES 1,009,432 1,765,405 991,796 4,480 996,276 769,129Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) 221,822 221,822 352,543 (4,480) 348,063 126,241Fund Balances at Beginning of Year 1,024,089 1,163,250 1,163,250 - 1,163,250 -FUND BALANCES AT END OF YEAR $ 1,245,911 1,385,072 1,515,793 (4,480) 1,511,313 126,241114

CITY OF LAREDO, TEXASSPECIAL POLICE PROGRAMSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:Federal $ 477,606 6,837,712 1,245,923 - 1,245,923 (5,591,789)State 239,110 730,850 449,000 - 449,000 (281,850)Investment Income:Interest Earnings - - 144 - 144 144TOTAL REVENUES 716,716 7,568,562 1,695,067 - 1,695,067 (5,873,495)EXPENDITURES:Police Grants:Click It or Ticket 25,460 9,000 8,311 - 8,311 689Tobacco 188,272 196,472 5,694 - 5,694 190,778DWI 63,650 63,650 - - - 63,650Alcohol Tobacco Firearms 101,840 101,840 32,540 - 32,540 69,300Customs Narcotics 115,844 115,844 48,255 - 48,255 67,589Bulletproof Vest Partnership 40,000 36,076 11,943 - 11,943 24,133Justice Assistance Grant 180,000 301,163 134,456 36,524 170,980 130,183Safe Neighborhood - 5,044 2,304 - 2,304 2,740Laredo Recovery Act - 281,320 277,018 - 277,018 4,302Fugitive Apprehension 42,494 35,931 28,497 - 28,497 7,434Ldo. Joint Terrorism TF 21,898 21,898 22,340 - 22,340 (442)Cops Progam - 4,369,266 244,392 - 244,392 4,124,874OCDETF 21,898 44,198 21,578 - 21,578 22,620FBI-Safe Streets 43,796 43,796 38,456 - 38,456 5,340Stonegarden Grant - 1,154,802 266,098 7,364 273,462 881,340Gang Initiative - 200,000 184,589 - 184,589 15,411GDEM - 300,000 250,405 - 250,405 49,595Other 76,777 76,777 - - - 76,777Total Operating Expenditures 921,929 7,357,077 1,576,876 43,888 1,620,764 5,736,313Capital Outlay - 416,896 169,483 235,098 404,581 12,315TOTAL EXPENDITURES 921,929 7,773,973 1,746,359 278,986 2,025,345 5,748,628Excess (Deficiency) of Revenues OverExpenditures (205,213) (205,411) (51,292) (278,986) (330,278) (124,867)OTHER FINANCING SOURCES (USES):Transfer In:General Fund 190,112 190,112 50,401 - 50,401 (139,711)TOTAL OTHER FINANCINGSOURCES (USES) 190,112 190,112 50,401 - 50,401 (139,711)Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (15,101) (15,299) (891) (278,986) (279,877) (264,578)Fund Balances at Beginning of Year 15,101 14,357 14,357 - 14,357 -FUND BALANCES AT END OF YEAR $ - (942) 13,466 (278,986) (265,520) (264,578)115

CITY OF LAREDO, TEXAS911 REGIONAL COMMUNICATIONS FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:State Emergency Commission $ 1,294,373 4,689,257 1,054,383 - 1,054,383 (3,634,874)Investment Income:Interest Earnings 100 1,200 707 - 707 (493)TOTAL REVENUES 1,294,473 4,690,457 1,055,090 - 1,055,090 (3,635,367)EXPENDITURES:Personnel Services 269,522 656,505 270,995 - 270,995 385,510Materials and Supplies 22,500 99,346 15,028 7,789 22,817 76,529Contractual Services 1,002,451 3,536,894 727,940 248,461 976,401 2,560,493Other - 1,200 - - - 1,200Total Operating Expenditures 1,294,473 4,293,945 1,013,963 256,250 1,270,213 3,023,732Capital Outlay - 396,512 40,420 666,466 706,886 (310,374)TOTAL EXPENDITURES 1,294,473 4,690,457 1,054,383 922,716 1,977,099 2,713,358Excess (Deficiency) of Revenues OverExpenditures - - 707 (922,716) (922,009) (922,009)Fund Balances at Beginning of Year - - - - - -FUND BALANCES AT END OF YEAR $ - - 707 (922,716) (922,009) (922,009)116

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CITY OF LAREDO, TEXASHEALTH FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:Federal Grants $ 62,667 262,667 181,829 - 181,829 (80,838)State Grants 10,558,638 12,927,336 8,374,234 - 8,374,234 (4,553,102)Other 1,104,975 1,793,686 1,005,532 - 1,005,532 (788,154)Licenses and Permits 348,600 348,600 382,523 - 382,523 33,923Fees and Collections 1,124,676 1,183,496 729,230 - 729,230 (454,266)Rents and Royalties 1,921 1,921 2,002 - 2,002 81Miscellaneous:Contributions 235,000 187,492 48,983 - 48,983 (138,509)Reimbursements 5,782 57,732 32,222 - 32,222 (25,510)Other 499,454 958,505 574,201 - 574,201 (384,304)TOTAL REVENUES 13,941,713 17,721,435 11,330,756 - 11,330,756 (6,390,679)EXPENDITURES:Administrative Divisions:Administration 1,308,432 1,316,178 1,254,967 5,171 1,260,138 56,040Health Education 100,069 80,283 76,621 1,092 77,713 2,570Vital Statistics 214,698 212,659 195,632 - 195,632 17,027E.M.S. Billing 337,337 310,077 247,836 2,046 249,882 60,195STD Clinic 81,865 77,405 69,049 81 69,130 8,275Maternity 49,015 81,360 55,117 6,320 61,437 19,923Immunization 222,704 220,137 203,022 6,770 209,792 10,345Tuberculosis 173,674 147,754 136,639 405 137,044 10,710Adult Health 52,876 53,141 51,266 218 51,484 1,657Laboratory 467,735 470,399 526,522 4,798 531,320 (60,921)Personal Health Services 56,471 79,080 78,239 62 78,301 779Budget and Grant Management 282,631 285,948 261,985 3,629 265,614 20,334Environmental 730,504 714,692 673,315 1,068 674,383 40,309Animal Control 813,807 970,081 842,165 1,392 843,557 126,524Total Administrative Divisions 4,891,818 5,019,194 4,672,375 33,052 4,705,427 313,767State Grants:T.N.R.C.C. - Continuous Air MonitoringStation 70,000 135,029 63,084 - 63,084 71,945H.I.V. - Prevention 388,218 519,987 435,391 276 435,667 84,320Immunization Action Plan 312,546 599,835 307,690 4,546 312,236 287,599Enviromental Protection Agency 62,667 62,667 247 - 247 62,420T.B. Federal - Tuberculosis 171,081 215,323 131,125 5,855 136,980 78,343H.I.V. - Consortia (Ryan White) 413,189 654,773 394,857 122,776 517,633 137,140H.I.V. - Housing Project (H.O.P.W.A.) 79,249 139,996 94,160 19,824 113,984 26,012Associateship for Community Healthand Resource Development - Title V 2,500 78,500 1,328 - 1,328 77,172Associateship for Community Healthand Resource Development - Family Planning 60,000 77,778 46,344 - 46,344 31,434Associateship for Community Healthand Resource Development - Prenatal $ 179,234 84,940 45,752 - 45,752 39,188(Continued)118

CITY OF LAREDO, TEXASHEALTH FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011(Continued)Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)State Grants (Continued)Primary Care $ 159,058 313,167 184,288 200 184,488 128,679HIV Social Services 135,805 210,396 137,995 - 137,995 72,401Bureau of Regional/Local HealthOperations 538,363 1,190,591 641,560 - 641,560 549,031Associateship for Community Healthand Resource Development - Dental 85,140 75,000 - - - 75,000Tuberculosis Elimination 229,436 406,854 212,707 - 212,707 194,147Women Infant and Children (W.I.C.) 4,150,625 4,292,963 3,878,154 9,800 3,887,954 405,009W.I.C. Counties Expansion 479,537 461,143 443,343 - 443,343 17,800Bio-Terrorism Preparedness 367,702 672,491 381,295 - 381,295 291,196Early Warning Preparedness 179,000 246,009 174,667 - 174,667 71,342Border Health - Surveillance 19,250 40,000 2,266 - 2,266 37,734CPS - Emergency Response 279,421 432,388 132,084 - 132,084 300,304CHS - Title XX - 1,657 - - - 1,657CVD & Stroke Prevention 30,000 47,186 17,115 - 17,115 30,071Community Diabetes Program - 80,000 817 - 817 79,183CPRIT - Cancer Screening 2,497,500 2,485,409 643,001 516,693 1,159,694 1,325,715Women and Children Health Program 232,890 236,706 206,749 2,274 209,023 27,683Special Projects 235,000 152,389 - - - 152,389Hepatitis B Program 21,000 21,000 - - - 21,000SCAN - HIV Testing 45,000 40,133 39,809 - 39,809 324Ventanilla de Salud Program 35,000 43,511 33,272 7,413 40,685 2,826Tex-Mex Binational Program 40,000 24,276 20,542 - 20,542 3,734CDC-Laredo Needs Assessment 198,620 180,355 - 180,355 18,265CHIP Perinate 47,015 177,310 40,516 511 41,027 136,283UTHSCSA - Bienestar 192,000 288,191 3,009 - 3,009 285,182UTHSCSA - STX Family Aids Network 25,000 44,970 23,718 - 23,718 21,252UTHSCSA - Dental School 300,000 419,646 140,456 - 140,456 279,190Total State Grant Expenses 12,062,426 15,170,834 9,057,696 690,168 9,747,864 5,422,970Total Operating Expenses 16,954,244 20,190,028 13,730,071 723,220 14,453,291 5,736,737Capital Outlay - 645,764 623,323 - 623,323 22,441TOTAL EXPENDITURES 16,954,244 20,835,792 14,353,394 723,220 15,076,614 5,759,178Excess (Deficiency) of Revenues OverExpenditures (3,012,531) (3,114,357) (3,022,638) (723,220) (3,745,858) (631,501)OTHER FINANCING SOURCES (USES):Transfer In:General Fund 2,985,441 2,985,441 3,058,484 - 3,058,484 73,043TOTAL OTHER FINANCINGSOURCES (USES) 2,985,441 2,985,441 3,058,484 - 3,058,484 73,043Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (27,090) (128,916) 35,846 (723,220) (687,374) (558,458)Fund Balances at Beginning of Year 27,090 621,394 621,394 (1,045) 620,349 (1,045)FUND BALANCE AT END OF YEAR $ - 492,478 657,240 (724,265) (67,025) (559,503)119

CITY OF LAREDO, TEXASSPECIAL FIRE GRANTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:Federal $ 143,914 4,031,878 444,704 - 444,704 (3,587,174)State 300,000 300,000 - - - (300,000)Investment Income:Interest Earnings - - 8 - 8 8TOTAL REVENUES 443,914 4,331,878 444,712 - 444,712 (3,887,166)EXPENDITURES:DHS/Fire Prevention & Safety 35,000 35,000 - - - 35,000SAFER Grant 1,168,183 5,056,147 1,534,964 - 1,534,964 3,521,183Other 300,000 300,000 - - - 300,000TOTAL EXPENDITURES 1,503,183 5,391,147 1,534,964 - 1,534,964 3,856,183Excess (Deficiency) of Revenues OverExpenditures (1,059,269) (1,059,269) (1,090,252) - (1,090,252) (30,983)OTHER FINANCING SOURCES (USES):Transfer In:General Fund 1,059,269 1,059,269 1,090,260 - 1,090,260 30,991TOTAL OTHER FINANCINGSOURCES (USES) 1,059,269 1,059,269 1,090,260 - 1,090,260 30,991Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) - - 8 - 8 8Fund Balances at Beginning of Year - 21,072 21,072 - 21,072 -FUND BALANCES AT END OF YEAR $ - 21,072 21,080 - 21,080 8120

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CITY OF LAREDO, TEXASINTERNATIONAL AIRPORTSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:Federal $ 97,455 97,455 69,880 - 69,880 (27,575)State 1,600 1,600 2,924 - 2,924 1,324Fees and Collections 4,000 4,000 11,825 - 11,825 7,825Investment Income:Interest Earnings - 400 2,775 - 2,775 2,375Rents and Royalties 4,917,171 4,916,771 4,129,984 - 4,129,984 (786,787)Miscellaneous:Reimbursements 488,625 488,625 444,628 - 444,628 (43,997)TOTAL REVENUES 5,508,851 5,508,851 4,662,016 - 4,662,016 (846,835)EXPENDITURES:Administration:Personnel Services 541,614 541,614 525,728 - 525,728 15,886Materials and Supplies 25,981 40,879 51,125 34 51,159 (10,280)Contractual Services 1,857,908 1,907,087 1,861,155 14,553 1,875,708 31,379Other 233,912 145,265 22,483 (22,483) - 145,265Total Administration 2,659,415 2,634,845 2,460,491 (7,896) 2,452,595 182,250Building Maintenance:Personnel Services 493,324 450,824 346,656 - 346,656 104,168Materials and Supplies 97,475 99,231 81,175 5,051 86,226 13,005Contractual Services 257,368 338,827 295,987 16,251 312,238 26,589Total Building Maintenance 848,167 888,882 723,818 21,302 745,120 143,762Ground Maintenance:Personnel Services 301,687 301,687 290,849 - 290,849 10,838Materials and Supplies 43,514 43,668 35,248 44 35,292 8,376Contractual Services 87,059 87,059 83,221 - 83,221 3,838Total Ground Maintenance $ 432,260 432,414 409,318 44 409,362 23,052(Continued)122

CITY OF LAREDO, TEXASINTERNATIONAL AIRPORTSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011(Continued)Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)EXPENDITURES (Continued)Airport Police:Personnel Services $ 808,944 808,944 824,333 - 824,333 (15,389)Materials and Supplies 14,875 15,750 14,803 - 14,803 947Contractual Services 199,626 209,951 195,683 5,821 201,504 8,447Total Airport Police 1,023,445 1,034,645 1,034,819 5,821 1,040,640 (5,995)Foreign Trade Zone:Personnel Services 12,525 12,525 13,092 - 13,092 (567)Materials and Supplies 5,929 5,929 1,863 - 1,863 4,066Contractual Services 8,384 8,384 8,284 - 8,284 100Total Foreign Trade Zone 26,838 26,838 23,239 - 23,239 3,599Total Operating Expenditures 4,990,125 5,017,624 4,651,685 19,271 4,670,956 346,668Capital Outlay 50,000 75,957 70,491 - 70,491 5,466TOTAL EXPENDITURES 5,040,125 5,093,581 4,722,176 19,271 4,741,447 352,134Excess (Deficiency) of Revenues OverExpenditures 468,726 415,270 (60,160) (19,271) (79,431) (494,701)OTHER FINANCING SOURCES (USES):Transfers Out:Airport Construction Fund (50,000) (50,000) (47,286) - (47,286) 2,714Debt Service (495,697) (495,697) (495,697) - (495,697) -Sale of Assets - - 18,314 - 18,314 18,314TOTAL OTHER FINANCINGSOURCES (USES) (545,697) (545,697) (524,669) - (524,669) 21,028Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (76,971) (130,427) (584,829) (19,271) (604,100) (473,673)Fund Balances at Beginning of Year 903,907 753,531 753,531 (22,483) 731,048 (22,483)FUND BALANCE AT END OF YEAR $ 826,936 623,104 168,702 (41,754) 126,948 (496,156)123

CITY OF LAREDO, TEXASCIVIC CENTERSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Investment Income:Interest Earnings $ 200 200 107 - 107 (93)Discount Earnings - - 19 - 19 19Rents and Royalties 370,200 370,200 232,162 - 232,162 (138,038)Miscellaneous:Reimbursements - - 154 - 154 154TOTAL REVENUES 370,400 370,400 232,442 - 232,442 (137,958)EXPENDITURES:Personnel Services 442,075 442,075 453,179 - 453,179 (11,104)Materials and Supplies 85,441 88,413 82,290 3,665 85,955 2,458Contractual Services 277,037 272,815 242,990 12,266 255,256 17,559Other 360 1,610 2,100 (950) 1,150 460TOTAL EXPENDITURES 804,913 804,913 780,559 14,981 795,540 9,373Excess (Deficiency) of Revenues OverExpenditures (434,513) (434,513) (548,117) (14,981) (563,098) (128,585)OTHER FINANCING SOURCES (USES):Transfer In:Hotel - Motel Occupancy Tax 389,414 389,414 518,949 - 518,949 129,535TOTAL OTHER FINANCINGSOURCES (USES) 389,414 389,414 518,949 - 518,949 129,535Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (45,099) (45,099) (29,168) (14,981) (44,149) 950Fund Balances at Beginning of Year - 45,099 45,099 (950) 44,149 (950)FUND BALANCE AT END OF YEAR $ (45,099) - 15,931 (15,931) - -124

CITY OF LAREDO, TEXASHOTEL-MOTEL OCCUPANCY TAXSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustment Basis (Negative)REVENUES:Taxes:Hotel-Motel Occupancy Tax $ 2,543,982 2,543,982 4,029,301 - 4,029,301 1,485,319Penalty and Interest 12,057 12,057 26,209 - 26,209 14,152Fees and Collections - - 84 - 84 84Investment Income:Interest Earnings 4,000 4,000 6,040 - 6,040 2,040Miscellaneous:Reimbursements - - 100 - 100 100TOTAL REVENUES 2,560,039 2,560,039 4,061,734 - 4,061,734 1,501,695EXPENDITURES:Contractual Services:Administration - - 533 - 533 (533)Tourism and Promotion 223,554 223,554 223,535 19 223,554 -Historical and Arts 248,400 268,400 267,995 405 268,400 -TOTAL EXPENDITURES 471,954 491,954 492,063 424 492,487 (533)Excess (Deficiency) of Revenues OverExpenditures 2,088,085 2,068,085 3,569,671 (424) 3,569,247 1,501,162OTHER FINANCING SOURCES (USES):Transfers Out:Civic Center (389,414) (429,414) (518,949) - (518,949) (89,535)General Fund (19,807) (9,807) (7,538) - (7,538) 2,269Convention and Visitors Bureau (1,743,223) (1,923,223) (1,927,295) - (1,927,295) (4,072)Public Access Channel (108,975) (108,975) (106,240) - (106,240) 2,735TOTAL OTHER FINANCINGSOURCES (USES) (2,261,419) (2,471,419) (2,560,022) - (2,560,022) (88,603)Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (173,334) (403,334) 1,009,649 (424) 1,009,225 1,412,559Fund Balances at Beginning of Year 173,315 726,495 726,495 - 726,495 -FUND BALANCES AT END OF YEAR $ (19) 323,161 1,736,144 (424) 1,735,720 1,412,559125

CITY OF LAREDO, TEXASVETERANS FIELDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Investment Income:Interest Earnings $ - - 12 - 12 12Rents and Royalties 43,000 43,000 2,976 - 2,976 (40,024)Miscellaneous:Reimbursements 22,051 22,051 - - - (22,051)TOTAL REVENUES 65,051 65,051 2,988 - 2,988 (62,063)EXPENDITURES:Personnel Services 10,184 10,184 1,064 - 1,064 9,120Materials and Supplies 6,900 10,000 6,318 - 6,318 3,682Contractual Services 61,404 58,304 42,083 - 42,083 16,221Other - - 43,010 (43,010) - -Total Operating Expenditures 78,488 78,488 92,475 (43,010) 49,465 29,023TOTAL EXPENDITURES 78,488 78,488 92,475 (43,010) 49,465 29,023Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (13,437) (13,437) (89,487) 43,010 (46,477) (33,040)Fund Balances at Beginning of Year 9,786 51,246 51,246 (43,010) 8,236 (43,010)FUND BALANCES AT END OF YEAR $ (3,651) 37,809 (38,241) - (38,241) (76,050)126

CITY OF LAREDO, TEXASPUBLIC ACCESS CHANNELSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Production and Transmission $ 25,647 25,647 22,813 - 22,813 (2,834)Peg Funds 260,000 260,000 267,434 - 267,434 7,434Investment Income:Interest Earnings 1,500 1,500 1,542 - 1,542 42Discount Earnings 12 12 9 - 9 (3)Miscellaneous:Reimbursements 55 55 - - - (55)TOTAL REVENUES 287,214 287,214 291,798 - 291,798 4,584EXPENDITURES:AdministrationPersonnel Services 343,150 343,150 334,737 - 334,737 8,413Materials and Supplies 32,124 35,624 32,490 1,395 33,885 1,739Contractual Services 75,531 72,031 64,297 4,465 68,762 3,269Total Operating Expenditures 450,805 450,805 431,524 5,860 437,384 13,421Capital Outlay 418,944 418,944 157,160 207,569 364,729 54,215TOTAL EXPENDITURES 869,749 869,749 588,684 213,429 802,113 67,636Excess (Deficiency) of Revenues OverExpenditures (582,535) (582,535) (296,886) (213,429) (510,315) 72,220OTHER FINANCING SOURCES (USES):Transfers In:General Fund 312,121 312,121 304,287 - 304,287 (7,834)Hotel-Motel Occupancy Tax 108,975 108,975 106,240 - 106,240 (2,735)TOTAL OTHER FINANCINGSOURCES (USES) 421,096 421,096 410,527 - 410,527 (10,569)Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (161,439) (161,439) 113,641 (213,429) (99,788) 61,651Fund Balances at Beginning of Year 255,563 389,320 389,320 - 389,320 -FUND BALANCE AT END OF YEAR $ 94,124 227,881 502,961 (213,429) 289,532 61,651127

CITY OF LAREDO, TEXASMERCADO MANAGEMENT FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Investment Income:Interest Earnings $ 1,000 1,000 1,054 - 1,054 54Rents and Royalties 118,411 118,411 118,045 - 118,045 (366)TOTAL REVENUES 119,411 119,411 119,099 - 119,099 (312)EXPENDITURES:Personnel Services 6,364 6,364 58,375 - 58,375 (52,011)Materials and Supplies 22,327 24,327 11,319 1,370 12,689 11,638Contractual Services 100,179 98,179 54,000 9,891 63,891 34,288Total Operating Expenditures 128,870 128,870 123,694 11,261 134,955 (6,085)TOTAL EXPENDITURES 128,870 128,870 123,694 11,261 134,955 (6,085)Excess (Deficiency) of Revenues OverExpenditures (9,459) (9,459) (4,595) (11,261) (15,856) (6,397)Fund Balances at Beginning of Year 266,054 239,596 239,596 - 239,596 -FUND BALANCE AT END OF YEAR $ 256,595 230,137 235,001 (11,261) 223,740 (6,397)128

CITY OF LAREDO, TEXASLAREDO CONVENTION AND VISITORS BUREAUSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Fees and Collections $ 90,850 15,850 12,108 - 12,108 (3,742)Investment Income:Interest Earnings - - 38 - 38 38Miscellaneous:Reimbursements 16,600 91,600 145,031 - 145,031 53,431TOTAL REVENUES 107,450 107,450 157,177 - 157,177 49,727EXPENDITURES:Personnel Services 578,365 578,565 514,790 - 514,790 63,775Materials and Supplies 86,298 141,208 136,179 1,727 137,906 3,302Contractual Services 1,254,718 1,319,773 1,339,857 36,030 1,375,887 (56,114)Total Operating Expenditures 1,919,381 2,039,546 1,990,826 37,757 2,028,583 10,963Capital Outlay - 59,835 57,445 - 57,445 2,390TOTAL EXPENDITURES 1,919,381 2,099,381 2,048,271 37,757 2,086,028 13,353Excess (Deficiency) of Revenues OverExpenditures (1,811,931) (1,991,931) (1,891,094) (37,757) (1,928,851) 63,080OTHER FINANCING SOURCES (USES):Transfer In:Hotel-Motel Occupancy Tax 1,743,223 1,923,223 1,927,295 - 1,927,295 4,072TOTAL OTHER FINANCINGSOURCES (USES) 1,743,223 1,923,223 1,927,295 - 1,927,295 4,072Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (68,708) (68,708) 36,201 (37,757) (1,556) 67,152Fund Balances at Beginning of Year - 68,708 68,708 - 68,708 -FUND BALANCE AT END OF YEAR $ (68,708) - 104,909 (37,757) 67,152 67,152129

CITY OF LAREDO, TEXASRECREATION FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Investment Income:Interest Earnings $ 1,500 1,500 1,087 - 1,087 (413)Fees and Collections 146,000 176,000 213,421 - 213,421 37,421Miscellaneous:Reimbursements - - 500 - 500 500TOTAL REVENUES 147,500 177,500 215,008 - 215,008 37,508EXPENDITURES:Materials and Supplies 27,439 83,830 54,624 11,084 65,708 18,122Contractual Services 68,791 74,541 70,164 - 70,164 4,377Other 15,000 15,000 (14) - (14) 15,014Total Operating Expenditures 111,230 173,371 124,774 11,084 135,858 37,513Capital Outlay - 24,250 - 23,197 23,197 1,053TOTAL EXPENDITURES 111,230 197,621 124,774 34,281 159,055 38,566Excess (Deficiency) of Revenues OverExpenditures 36,270 (20,121) 90,234 (34,281) 55,953 76,074Excess (Deficiency) of Revenues OverExpenditures 36,270 (20,121) 90,234 (34,281) 55,953 76,074Fund Balances at Beginning of Year 150,192 191,256 191,256 - 191,256 -FUND BALANCES AT END OF YEAR $ 186,462 171,135 281,490 (34,281) 247,209 76,074130

CITY OF LAREDO, TEXASPARKING METERSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:Federal Emergency Management Agency $ - 56,730 8,823 - 8,823 (47,907)Licenses and Permits 10,000 10,000 5,424 - 5,424 (4,576)Fines 620,200 620,200 514,066 - 514,066 (106,134)Fees and Collections 1,480,000 1,480,000 1,482,929 - 1,482,929 2,929Investment Income:Interest Earnings 7,000 7,000 6,060 - 6,060 (940)Miscellaneous:Reimbursements - - 904 - 904 904TOTAL REVENUES 2,117,200 2,173,930 2,018,206 - 2,018,206 (155,724)EXPENDITURES:Personnel Services 1,185,201 1,185,846 1,014,894 - 1,014,894 170,952Materials and Supplies 68,254 98,360 68,656 18,745 87,401 10,959Contractual Services 235,553 283,132 242,125 10,746 252,871 30,261Other 600 600 (621) - (621) 1,221Total Operating Expenditures 1,489,608 1,567,938 1,325,054 29,491 1,354,545 213,393Capital Outlay 322,060 300,460 47,783 27,162 74,945 225,515TOTAL EXPENDITURES 1,811,668 1,868,398 1,372,837 56,653 1,429,490 438,908Excess (Deficiency) of Revenues OverExpenditures 305,532 305,532 645,369 (56,653) 588,716 283,184OTHER FINANCING SOURCES (USES):Transfers Out:Debt Service Fund (284,029) (284,029) (284,029) - (284,029) -General Fund (1,000,000) (1,000,000) (1,000,000) - (1,000,000) -TOTAL OTHER FINANCINGSOURCES (USES) (1,284,029) (1,284,029) (1,284,029) - (1,284,029) -Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (978,497) (978,497) (638,660) (56,653) (695,313) 283,184Fund Balances at Beginning of Year 1,495,248 1,352,694 1,352,694 - 1,352,694 -FUND BALANCE AT END OF YEAR $ 516,751 374,197 714,034 (56,653) 657,381 283,184131

CITY OF LAREDO, TEXASHAZARDOUS MATERIALSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Licenses and Permits $ 285,000 285,000 304,600 - 304,600 19,600Investment Income:Interest Earnings 600 600 86 - 86 (514)Miscellaneous:Reimbursements - - 25 - 25 25TOTAL REVENUES 285,600 285,600 304,711 - 304,711 19,111EXPENDITURES:Personnel Services 174,093 174,093 163,963 - 163,963 10,130Materials and Supplies 7,690 7,690 7,054 318 7,372 318Contractual Services 28,354 28,354 15,233 8,400 23,633 4,721TOTAL EXPENDITURES 210,137 210,137 186,250 8,718 194,968 15,169Excess (Deficiency) of Revenues OverExpenditures 75,463 75,463 118,461 (8,718) 109,743 34,280OTHER FINANCING SOURCES (USES):Transfer Out:Environmental Services (121,113) (121,113) (121,113) - (121,113) -TOTAL OTHER FINANCINGSOURCES (USES) (121,113) (121,113) (121,113) - (121,113) -Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (45,650) (45,650) (2,652) (8,718) (11,370) 34,280Fund Balances at Beginning of Year 45,646 26,946 26,946 - 26,946 -FUND BALANCE AT END OF YEAR $ (4) (18,704) 24,294 (8,718) 15,576 34,280132

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CITY OF LAREDO, TEXASENVIRONMENTAL SERVICESSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Storm Water Fees $ 6,026,811 6,026,811 6,153,134 - 6,153,134 126,323Intergovernmental:Department of Energy - 2,083,600 1,435,140 - 1,435,140 (648,460)Economic Development Agency - 1,000,000 179,331 - 179,331 (820,669)State Energy Conservation Office - 175,000 175,000 - 175,000 -BECC - 45,000 - - - (45,000)HMGP Grant-Canal Drainage - 3,768,107 151,342 - 151,342 (3,616,765)STDC-Regional Solid Waste Mgmt 40,000 40,000 - - - (40,000)Texas Department of Transportation 44,000 362,546 44,000 - 44,000 (318,546)Universities and Colleges 10,000 10,000 10,333 - 10,333 333Investment Income:Interest Earnings 24,900 24,900 18,951 - 18,951 (5,949)Discount Earnings - - 1,512 - 1,512 1,512Miscellaneous:Reimbursements 145,790 145,790 19,983 - 19,983 (125,807)TOTAL REVENUES 6,291,501 13,681,754 8,188,726 - 8,188,726 (5,493,028)EXPENDITURES:Administration:Personnel Services 246,041 246,041 247,528 - 247,528 (1,487)Materials and Supplies - - 52 - 52 (52)Contractual Services 82,040 82,040 66,282 - 66,282 15,758Other - - 23,551 (23,551) - -Total Administration 328,081 328,081 337,413 (23,551) 313,862 14,219Creek Cleaning:Personnel Services 911,570 718,484 715,800 - 715,800 2,684Materials and Supplies 159,007 160,594 133,353 123 133,476 27,118Contractual Services 218,505 458,191 400,265 74,424 474,689 (16,498)Total Creek Cleaning 1,289,082 1,337,269 1,249,418 74,547 1,323,965 13,304Stormwater:Personnel 683,365 683,365 575,377 - 575,377 107,988Materials and Supplies 68,069 83,519 53,078 1,919 54,997 28,522Contractual Services 1,366,642 1,699,559 1,199,685 172,266 1,371,951 327,608Other 19,768 - - - - -Total Stormwater 2,137,844 2,466,443 1,828,140 174,185 2,002,325 464,118CD Code Enforcement:Personnel Services 42,952 42,952 42,571 - 42,571 381Materials and Supplies 279 279 279 - 279 -Contractual Services 763 763 - - - 763Total CD Code Enforcement 43,994 43,994 42,850 - 42,850 1,144BECC-Border EnvironmentPersonnel - 3,000 - - - 3,000Materials and Supplies - 2,000 - - - 2,000Contractual Services - 40,000 - 28,000 28,000 12,000Total BECC-Border Environment $ - 45,000 - 28,000 28,000 17,000(Continued)134

CITY OF LAREDO, TEXASENVIRONMENTAL SERVICESSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011(Continued)Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)EXPENDITURES (Continued)STDC - Regional Management:Materials and Supplies 20,000 20,000 - - - 20,000Contractual Services 20,000 20,000 - - - 20,000Total STDC - Regional Management 40,000 40,000 - - - 40,000Department of Energy:Personnel - 50,000 30,058 - 30,058 19,942Contractual Services - 471,720 93,023 - 93,023 378,697Total Department of Energy - 521,720 123,081 - 123,081 398,639Storm Water Improvements:Contractual Services 100,000 100,000 - - - 100,000Reserve Appropriation 823,373 573,373 - - - 573,373Total Storm Water Improvements 923,373 673,373 - - - 673,373Total Operating Expenditures 4,762,374 5,455,880 3,580,902 253,181 3,834,083 1,621,797Capital Outlay 17,708,865 25,171,823 4,105,858 1,815,372 5,921,230 19,250,593TOTAL EXPENDITURES 22,471,239 30,627,703 7,686,760 2,068,553 9,755,313 20,872,390Excess (Deficiency) of Revenues OverExpenditures (16,179,738) (16,945,949) 501,966 (2,068,553) (1,566,587) 15,379,362OTHER FINANCING SOURCES (USES):Transfers In:Hazardous Materials 121,113 121,113 121,113 - 121,113 -2007 C.O. Issue 17,441,075 17,441,075 2,045,439 - 2,045,439 (15,395,636)Transfers Out:Debt Service (1,957,665) (1,957,665) (1,957,665) - (1,957,665) -Keep Laredo Beautiful (100,000) (100,000) (99,047) - (99,047) 953TOTAL OTHER FINANCINGSOURCES (USES) 15,504,523 15,504,523 109,840 - 109,840 (15,394,683)Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (675,215) (1,441,426) 611,806 (2,068,553) (1,456,747) (15,321)Fund Balances at Beginning of Year 2,917,941 3,541,006 3,541,006 (23,551) 3,517,455 (23,551)FUND BALANCE AT END OF YEAR $ 2,242,726 2,099,580 4,152,812 (2,092,104) 2,060,708 (38,872)135

CITY OF LAREDO, TEXASKEEP LAREDO BEAUTIFUL, INC. FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Investment Income:Interest Earnings $ 30,000 30,000 13,267 - 13,267 (16,733)Miscellaneous:Contributions - - 9 - 9 9TOTAL REVENUES 30,000 30,000 13,276 - 13,276 (16,724)EXPENDITURES:Personnel Services 68,303 68,303 68,180 - 68,180 123Materials and Supplies 31,011 44,088 42,088 994 43,082 1,006Contractual Services 10,433 10,947 10,808 - 10,808 139Other 30,000 16,409 - - - 16,409TOTAL EXPENDITURES 139,747 139,747 121,076 994 122,070 17,677Excess (Deficiency) of Revenues OverExpenditures (109,747) (109,747) (107,800) (994) (108,794) 953OTHER FINANCING SOURCES (USES):Transfer In:Environmental Services 100,000 100,000 99,047 - 99,047 (953)TOTAL OTHER FINANCINGSOURCES (USES) 100,000 100,000 99,047 - 99,047 (953)Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (9,747) (9,747) (8,753) (994) (9,747) -Fund Balances at Beginning of Year - 9,747 9,747 - 9,747 -FUND BALANCE AT END OF YEAR $ (9,747) - 994 (994) - -136

CITY OF LAREDO, TEXASNOISE ABATEMENT LEASE PROGRAMSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Investment Income:Interest Earnings $ 4,900 4,900 3,814 - 3,814 (1,086)Fees and Collections 22,000 22,000 39,775 - 39,775 17,775Rents and Royalties 1,158,000 1,158,000 1,245,863 - 1,245,863 87,863Miscellaneous:Reimbursements 3,292 3,292 8,184 - 8,184 4,892TOTAL REVENUES 1,188,192 1,188,192 1,297,636 - 1,297,636 109,444EXPENDITURES:Personnel Services 288,892 291,365 239,693 - 239,693 51,672Materials and Supplies 83,526 127,126 106,371 4,199 110,570 16,556Contractual Services 523,960 527,877 393,075 21,232 414,307 113,570Other 69,824 19,834 23,653 (23,643) 10 19,824TOTAL EXPENDITURES 966,202 966,202 762,792 1,788 764,580 201,622Excess (Deficiency) of Revenues OverExpenditures 221,990 221,990 534,844 (1,788) 533,056 311,066Excess (Deficiency) of Revenues OverExpenditures 221,990 221,990 534,844 (1,788) 533,056 311,066Fund Balances at Beginning of Year 660,045 516,106 516,106 (23,643) 492,463 (23,643)FUND BALANCES AT END OF YEAR $ 882,035 738,096 1,050,950 (25,431) 1,025,519 287,423137

CITY OF LAREDO, TEXASSPORTS AND COMMUNITY VENUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Taxes:General Sales & Use Tax $ 5,820,153 5,820,153 6,733,805 - 6,733,805 913,652Investment Income:Interest Earnings 159,600 159,600 109,679 - 109,679 (49,921)Miscellaneous:Contributions - - 150,000 - 150,000 150,000TOTAL REVENUES 5,979,753 5,979,753 6,993,484 - 6,993,484 1,013,731EXPENDITURES:Materials and Supplies 60,000 102,317 36,966 7,350 44,316 58,001Contractual Services 167,947 367,941 195,764 143,046 338,810 29,131Other 730,000 435,000 - - - 435,000Total Operating Expenditures 957,947 905,258 232,730 150,396 383,126 522,132Capital Outlay - 52,689 52,688 - 52,688 1TOTAL EXPENDITURES 957,947 957,947 285,418 150,396 435,814 522,133Excess (Deficiency) of Revenues OverExpenditures 5,021,806 5,021,806 6,708,066 (150,396) 6,557,670 1,535,864OTHER FINANCING SOURCES (USES):Transfer In:Sports & Community Operations 2,882,955 2,882,955 - - - (2,882,955)Transfers Out:Sports & Community Debt Service (2,882,955) (2,882,955) - - - 2,882,955Laredo Entertainment Center Oerations (938,616) (938,616) (938,534) - (938,534) 82Debt Service (3,114,194) (3,114,194) (3,114,194) - (3,114,194) -Baseball Stadium - (7,000,000) (7,000,000) - (7,000,000) -TOTAL OTHER FINANCINGSOURCES (USES) (4,052,810) (11,052,810) (11,052,728) - (11,052,728) 82Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) 968,996 (6,031,004) (4,344,662) (150,396) (4,495,058) 1,535,946Fund Balances at Beginning of Year 24,137,304 23,732,592 23,732,592 - 23,732,592 -FUND BALANCES AT END OF YEAR $ 25,106,300 17,701,588 19,387,930 (150,396) 19,237,534 1,535,946138

CITY OF LAREDO, TEXASLAREDO ENERGY ARENASCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Charges for Services $ 3,407,974 3,407,974 3,491,106 - 3,491,106 83,132TOTAL REVENUES 3,407,974 3,407,974 3,491,106 - 3,491,106 83,132EXPENDITURES:Contractual Services 4,346,590 4,346,590 4,390,559 - 4,390,559 (43,969)TOTAL EXPENDITURES 4,346,590 4,346,590 4,390,559 - 4,390,559 (43,969)Excess (Deficiency) of Revenues OverExpenditures (938,616) (938,616) (899,453) - (899,453) 39,163OTHER FINANCING SOURCES (USES):Transfer In:Sports & Community Venue Fund 938,616 938,616 938,534 - 938,534 (82)TOTAL OTHER FINANCINGSOURCES (USES) 938,616 938,616 938,534 - 938,534 (82)Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) - - 39,081 - 39,081 39,081Fund Balances at Beginning of Year - (59,013) (59,013) - (59,013) -FUND BALANCES AT END OF YEAR $ - (59,013) (19,932) - (19,932) 39,081139

CITY OF LAREDO, TEXASFRIENDS OF THE LIBRARYSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)Intergovernmental:Federal Operating Grant $ 337,500 758,831 296,902 - 296,902 (461,929)State Operating Grants 46,000 35,265 34,928 - 34,928 (337)Charges for Services 1,900 1,900 - - - (1,900)Investment Income:Interest Earnings 600 600 630 - 630 30Miscellaneous:Other 15,000 15,000 100 - 100 (14,900)TOTAL REVENUES 401,000 811,596 332,560 - 332,560 (479,036)Library:Materials and Supplies 10,800 10,800 - - - 10,800Contractual Services 3,202 12,419 228 - 228 12,191Total Library 14,002 23,219 228 - 228 22,991FOTL-Loan Star Library Grant:Materials and Supplies 41,000 26,774 26,437 - 26,437 337Materials and Supplies 5,000 8,491 8,491 - 8,491 -Total FOTL-Loan Star Library Grant 46,000 35,265 34,928 - 34,928 337FCC-Universal Service Program:Contractual Services 375,848 800,500 314,432 838 315,270 485,230Total FCC-Universal Service Program 375,848 800,500 314,432 838 315,270 485,230TOTAL EXPENDITURES 435,850 858,984 349,588 838 350,426 508,558Excess (Deficiency) of Revenues OverExpenditures (34,850) (47,388) (17,028) (838) (17,866) 29,522Excess (Deficiency) of Revenues OverExpenditures (34,850) (47,388) (17,028) (838) (17,866) 29,522Fund Balances at Beginning of Year 100,958 130,681 130,681 - 130,681 -FUND BALANCES AT END OF YEAR $ 66,108 83,293 113,653 (838) 112,815 29,522140

CITY OF LAREDO, TEXASPOLICE TRUST FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Intergovernmental:Other $ - - 100 - 100 100Investment Income:Interest Earnings 12,000 12,000 24,155 - 24,155 12,155Miscellaneous:Forfeitures 1,020,000 1,020,000 2,631,778 - 2,631,778 1,611,778Reimbursements 67,000 67,000 99,181 - 99,181 32,181TOTAL REVENUES 1,099,000 1,099,000 2,755,214 - 2,755,214 1,656,214EXPENDITURES:Personnel Services 344,885 344,885 - - - 344,885Materials and Supplies 612,367 822,215 563,177 66,939 630,116 192,099Contractual Services 244,512 354,558 160,749 33,920 194,669 159,889Other 200,000 - 18,578 - 18,578 (18,578)Total Operating Expenditures 1,401,764 1,521,658 742,504 100,859 843,363 678,295Debt Service:Principal 415,684 670,011 570,009 - 570,009 100,002Interest 4,877 50,550 50,550 - 50,550 -Capital Outlay 1,901,781 4,089,240 3,351,542 573,112 3,924,654 164,586TOTAL EXPENDITURES 3,724,106 6,331,459 4,714,605 673,971 5,388,576 942,883OTHER FINANCING SOURCES (USES):Bond / Capital Lease Proceeds - 807,353 807,653 - 807,653 300Transfers Out:Debt Service (86,220) (86,220) (86,220) - (86,220) -TOTAL OTHER FINANCINGSOURCES (USES) (86,220) 721,133 721,433 - 721,433 300Excess (Deficiency) of Revenues OverExpenditures and Other Sources (Uses) (2,711,326) (4,511,326) (1,237,958) (673,971) (1,911,929) 2,599,397Fund Balances at Beginning of Year 1,828,362 6,459,070 6,459,070 - 6,459,070 -FUND BALANCES AT END OF YEAR $ (882,964) 1,947,744 5,221,112 (673,971) 4,547,141 2,599,397141

CITY OF LAREDO, TEXASWEBB COUNTY COLONIAS PROJECTSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:State $ 27,836,764 422,198 28,258,962 32,288,564Webb County 539,750 - 539,750 539,750Fees and Collections 330,851 - 330,851 330,851Investment Income:Interest Earnings 89,877 2,020 91,897 89,213Miscellaneous:Contributions 62,535 - 62,535 915,000TOTAL REVENUES 28,859,777 424,218 29,283,995 34,163,378EXPENDITURES:Other 31,501,283 422,198 31,923,481 36,753,449TOTAL EXPENDITURES 31,501,283 422,198 31,923,481 36,753,449Excess (Deficiency) of RevenuesOver (Under) Expenditures (2,641,506) 2,020 (2,639,486) (2,590,071)OTHER FINANCING SOURCES (USES):Transfers In:Waterworks System 1,831,908 - 1,831,908 1,299,350Sewer System 1,356,040 - 1,356,040 1,290,721-TOTAL OTHER FINANCING SOURCES: 3,187,948 - 3,187,948 2,590,071Net Change in Fund Balances $ 546,442 2,020 548,462 -Fund Balances-Beginning 546,442Fund Balances-Ending $ 548,462142

CITY OF LAREDO, TEXASPARKS CAPITAL GRANTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:State $ 226,921 916,973 1,143,894 4,229,361Webb County 360,654 - 360,654 375,000Investment Income:Interest Earnings 12,581 222 12,803 12,727Miscellaneous:Contributions and Donations 498,762 - 498,762 4,267,987TOTAL REVENUES 1,098,918 917,195 2,016,113 8,885,075EXPENDITURES:Contractual Services 28,101 - 28,101 28,101Other - - - 1,713,282Capital Outlay 1,167,180 946,614 2,113,794 7,615,046TOTAL EXPENDITURES 1,195,281 946,614 2,141,895 9,356,429Excess (Deficiency) of RevenuesOver (Under) Expenditures (96,363) (29,419) (125,782) (471,354)OTHER FINANCING SOURCES (USES):Transfers In:2007 C.O. Bond 101,003 29,641 130,644 322,813General Fund 148,541 - 148,541 148,541-TOTAL OTHER FINANCING SOURCES: 249,544 29,641 279,185 471,354Net Change in Fund Balances $ 153,181 222 153,403 -Fund Balances-Beginning 153,181Fund Balances-Ending $ 153,403143

CITY OF LAREDO, TEXASCAPITAL GRANTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:Federal $ 198,400 - 198,400 922,939State 12,475,400 8,491,494 20,966,894 36,201,652TOTAL REVENUES 12,673,800 8,491,494 21,165,294 37,124,591EXPENDITURES:Other - - - 650,000Capital Outlay 13,852,412 9,061,957 22,914,369 40,607,065TOTAL EXPENDITURES 13,852,412 9,061,957 22,914,369 41,257,065Excess (Deficiency) of RevenuesOver (Under) Expenditures (1,178,612) (570,463) (1,749,075) (4,132,474)OTHER FINANCING SOURCES (USES):Transfers In:Capital Improvements Fund 433,515 120,548 554,063 811,1262006 C.O. Bond 53,992 29,153 83,145 177,9842007 C.O. Bond 691,105 420,365 1,111,470 2,481,4972008 C.O. Bond - 397 397 661,867TOTAL OTHER FINANCING SOURCES: 1,178,612 570,463 1,749,075 4,132,474Net Change in Fund Balances $ - - - -Fund Balances-Beginning -Fund Balances-Ending $ -144

CITY OF LAREDO, TEXASCONTRACTUAL OBLIGATIONSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ 270,331 2,160 272,491 286,582Miscellaneous:Other 72,635 4,377 77,012 66,066TOTAL REVENUES 342,966 6,537 349,503 352,648EXPENDITURES:Materials and Supplies 1,058,663 169,868 1,228,531 1,231,713Contractual Services 2,140 184 2,324 2,402Other - - - 22,649Capital Outlay 9,396,946 711,898 10,108,844 10,893,404TOTAL EXPENDITURES 10,457,749 881,950 11,339,699 12,150,168Excess (Deficiency) of RevenuesOver (Under) Expenditures (10,114,783) (875,413) (10,990,196) (11,797,520)OTHER FINANCING SOURCES (USES):Bond Issues 15,635,629 - 15,635,629 15,635,629Bond Premium 32,636 - 32,636 32,636Bond Costs (325,444) - (325,444) (325,444)Transfer In:General Fund 640,000 - 640,000 640,000Transfers Out:General Fund (640,000) - (640,000) (640,000)Transit System (3,572,828) (288) (3,573,116) (3,573,116)Debt Service Fund (2,185) - (2,185) (2,185)Sale of Assets 30,000 - 30,000 30,000TOTAL OTHER FINANCING SOURCES: 11,797,808 (288) 11,797,520 11,797,520Net Change in Fund Balances $ 1,683,025 (875,701) 807,324 -Fund Balances-Beginning 1,683,025Fund Balances-Ending $ 807,324145

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2000 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ 652,278 58 652,336 652,165Miscellaneous:Local Contributions 2,000,000 - 2,000,000 2,000,000Reimbursements 12,918 - 12,918 12,918TOTAL REVENUES 2,665,196 58 2,665,254 2,665,083EXPENDITURES:Contractual Services 6,359 5 6,364 6,364Debt Service 68,890 - 68,890 68,890Capital Outlay 12,233,091 33,285 12,266,376 12,266,376TOTAL EXPENDITURES 12,308,340 33,290 12,341,630 12,341,630Excess (Deficiency) of RevenuesOver (Under) Expenditures (9,643,144) (33,232) (9,676,376) (9,676,547)OTHER FINANCING SOURCES (USES):Bond Issues 9,365,000 - 9,365,000 9,365,000Transfers In:General Fund 2,298,347 - 2,298,347 2,298,347Capital Improvements Fund 200,000 - 200,000 200,000Transfers Out:General Fund (2,165,000) - (2,165,000) (2,165,000)Debt Service - (21,971) (21,971) (21,800)TOTAL OTHER FINANCING SOURCES: 9,698,347 (21,971) 9,676,376 9,676,547Net Change in Fund Balances $ 55,203 (55,203) - -Fund Balances-Beginning 55,203Fund Balances-Ending $ -146

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2002 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ 285,544 898 286,442 287,805Miscellaneous:Reimbursements 19,433 - 19,433 19,433TOTAL REVENUES 304,977 898 305,875 307,238EXPENDITURES:Contractual Services 3,008 73 3,081 3,081Debt Service 225,000 - 225,000 225,000Other - - - 1,363Capital Outlay 4,567,114 812,810 5,379,924 5,379,924TOTAL EXPENDITURES 4,795,122 812,883 5,608,005 5,609,368Excess (Deficiency) of RevenuesOver (Under) Expenditures (4,490,145) (811,985) (5,302,130) (5,302,130)OTHER FINANCING SOURCES (USES):Bond Issues 9,925,000 - 9,925,000 9,925,000Transfers Out:Debt Service Fund - (441) (441) (441)Fire Training Facility (982,636) - (982,636) (982,636)Solid Waste Fund (3,639,793) - (3,639,793) (3,639,793)TOTAL OTHER FINANCING SOURCES: 5,302,571 (441) 5,302,130 5,302,130Net Change in Fund Balances $ 812,426 (812,426) - -Fund Balances-Beginning 812,426Fund Balances-Ending $ -147

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2005 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ 1,476,611 567 1,477,178 1,478,847Other 472,429 - 472,429 472,430TOTAL REVENUES 1,949,040 567 1,949,607 1,951,277EXPENDITURES:Materials and Supplies 156,485 - 156,485 156,486Contractual Services 1,723 48 1,771 1,968Other 256,525 - 256,525 259,046Capital Outlay 14,044,751 101,012 14,145,763 14,511,651TOTAL EXPENDITURES 14,459,484 101,060 14,560,544 14,929,151Excess (Deficiency) of RevenuesOver (Under) Expenditures (12,510,444) (100,493) (12,610,937) (12,977,874)OTHER FINANCING SOURCES (USES):Bond Issues 15,625,000 - 15,625,000 15,625,000Transfer In:Risk Management 352,874 - 352,874 352,874Transfer Out:Communication System Fund (3,000,000) - (3,000,000) (3,000,000)TOTAL OTHER FINANCING SOURCES: 12,977,874 - 12,977,874 12,977,874Net Change in Fund Balances $ 467,430 (100,493) 366,937 -Fund Balances-Beginning 467,430Fund Balances-Ending $ 366,937148

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2006 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovermental:UTHSC - Dental Clinic $ 758,869 - 758,869 758,869Investment Income:Interest Earnings 1,942,124 3,327 1,945,451 1,964,194Discount Earnings 105 - 105 105Other 43,778 23 43,801 43,778TOTAL REVENUES 2,744,876 3,350 2,748,226 2,766,946EXPENDITURES:Materials and Supplies 37,552 - 37,552 37,552Contractual Services 8,320 281 8,601 10,568Other 758,869 15 758,884 783,042Capital Outlay 15,719,383 2,106,257 17,825,640 18,423,337TOTAL EXPENDITURES 16,524,124 2,106,553 18,630,677 19,254,499Excess (Deficiency) of RevenuesOver (Under) Expenditures (13,779,248) (2,103,203) (15,882,451) (16,487,553)OTHER FINANCING SOURCES (USES):Bond Issues 17,320,000 - 17,320,000 17,320,000Transfer In:Capital Improvements Fund 11,168 - 11,168 -Bond Costs (327,891) - (327,891) (327,891)Transfer Out:Capital Grants Fund (53,992) (29,153) (83,145) (177,984)Capital Improvements Fund (83,840) - (83,840) (326,572)TOTAL OTHER FINANCING SOURCES: 16,865,445 (29,153) 16,836,292 16,487,553Net Change in Fund Balances $ 3,086,197 (2,132,356) 953,841 -Fund Balances-Beginning 3,086,197Fund Balances-Ending $ 953,841149

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2007 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:School Districts $ 27,200 - 27,200 27,200Investment Income:Interest Earnings 6,456,640 56,961 6,513,601 6,612,551Miscellaneous:Contributions and Donations - 493,381 493,381 1,200,000Other 786,110 2,641 788,751 32,201TOTAL REVENUES 7,269,950 552,983 7,822,933 7,871,952EXPENDITURES:Materials and Supplies 618,204 18,435 636,639 715,680Contractual Services 74,841 54,974 129,815 49,384Other 27,200 - 27,200 455,161Capital Outlay 34,755,156 10,728,636 45,483,792 51,338,099TOTAL EXPENDITURES 35,475,401 10,802,045 46,277,446 52,558,324Excess (Deficiency) of RevenuesOver (Under) Expenditures (28,205,451) (10,249,062) (38,454,513) (44,686,372)OTHER FINANCING SOURCES (USES):Bond Issues 72,480,000 - 72,480,000 72,480,000Bond Costs (938,978) - (938,978) (938,978)Transfers In:2010 C.O. Bond Issue - 750,000 750,000 750,000Transfers Out:Environmental Services Fund (12,593,891) (2,045,439) (14,639,330) (17,441,075)Capital Grants Fund (691,106) (420,364) (1,111,470) (2,481,497)Solid Waste Fund (7,460,586) - (7,460,586) (7,460,586)Capital Improvements Fund (26,985) - (26,985) (248,597)Sale of Assets 27,105 - 27,105 27,105TOTAL OTHER FINANCING SOURCES: 50,795,559 (1,715,803) 49,079,756 44,686,372Net Change in Fund Balances $ 22,590,108 (11,964,865) 10,625,243 -Fund Balances-Beginning 22,590,108Fund Balances-Ending $ 10,625,243150

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2008 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ 1,214,971 51,987 1,266,958 1,322,179Other 20,541 196,883 217,424 198,111TOTAL REVENUES 1,235,512 248,870 1,484,382 1,520,290EXPENDITURES:Materials and Supplies - 49,537 49,537 50,068Contractual Services 22,210 158,279 180,489 243,153Other - - - 328,757Capital Outlay 13,636,470 6,700,342 20,336,812 30,657,870TOTAL EXPENDITURES 13,658,680 6,908,158 20,566,838 31,279,848Excess (Deficiency) of RevenuesOver (Under) Expenditures (12,423,168) (6,659,288) (19,082,456) (29,759,558)OTHER FINANCING SOURCES (USES):Proceeds - Long Term Debt 30,065,000 - 30,065,000 30,065,000Bond Premium 455,293 - 455,293 455,293Transfers In:2010 C.O. Bond Issue - 1,500,000 1,500,000 1,500,000Bond Costs (520,293) - (520,293) (520,293)Transfers Out:Capital Improvements Fund - - - (755,575)Parks Capital Grant (101,003) (29,641) (130,644) (323,000)Capital Grants Fund - (397) (397) (661,867)TOTAL OTHER FINANCING SOURCES: 29,898,997 1,469,962 31,368,959 29,759,558Net Change in Fund Balances $ 17,475,829 (5,189,326) 12,286,503 -Fund Balances-Beginning 17,475,829Fund Balances-Ending $ 12,286,503151

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2009 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ 135,800 41,872 177,672 228,188Other 2,466 5,617 8,083 -TOTAL REVENUES 138,266 47,489 185,755 228,188EXPENDITURES:Contractual Services 2,664 3,693 6,357 8,524Other - - - 171,442Debt Service 480,247 - 480,247 480,247Capital Outlay 3,038,904 9,569,420 12,608,324 27,048,222TOTAL EXPENDITURES 3,521,815 9,573,113 13,094,928 27,708,435Excess (Deficiency) of RevenuesOver (Under) Expenditures (3,383,549) (9,525,624) (12,909,173) (27,480,247)OTHER FINANCING SOURCES (USES):Proceeds - Long Term Debt 24,735,000 - 24,735,000 24,735,000Bond Premium 745,247 - 745,247 745,247Transfers In:2010 C.O. Bond Issue - 2,000,000 2,000,000 2,000,000TOTAL OTHER FINANCING SOURCES: 25,480,247 2,000,000 27,480,247 27,480,247Net Change in Fund Balances $ 22,096,698 (7,525,624) 14,571,074 -Fund Balances-Beginning 22,096,698Fund Balances-Ending $ 14,571,074152

CITY OF LAREDO, TEXASCERTIFICATE OF OBLIGATION 2010 ISSUESCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ - 56,737 56,737 49,394Miscellaneous:Reimbursements - 11,903 11,903 -TOTAL REVENUES - 68,640 68,640 49,394EXPENDITURES:Contractual Services - 654 654 1,000Other - - - 1,841,110Capital Outlay - 278,880 278,880 3,207,284TOTAL EXPENDITURES - 279,534 279,534 5,049,394Excess (Deficiency) of RevenuesOver (Under) Expenditures - (210,894) (210,894) (5,000,000)OTHER FINANCING SOURCES (USES):Proceeds - Long Term Debt - 9,545,000 9,545,000 9,545,000Bond Premium - 650,403 650,403 650,403Bond Costs - (195,403) (195,403) (195,403)Transfers Out:Capital Improvements Fund - (750,000) (750,000) (750,000)2007 C.O. Bond Fund - (750,000) (750,000) (750,000)2008 C.O. Bond Fund - (1,500,000) (1,500,000) (1,500,000)2009 C.O. Bond Fund - (2,000,000) (2,000,000) (2,000,000)TOTAL OTHER FINANCING SOURCES: - 5,000,000 5,000,000 5,000,000Net Change in Fund Balances $ - 4,789,106 4,789,106 -Fund Balances-Beginning -Fund Balances-Ending $ 4,789,106153

CITY OF LAREDO, TEXASBASEBALL STADIUMSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Investment Income:Interest Earnings $ - 38,102 38,102 38,062Miscellaneous:Contributions and Donations - - - 1,000,000TOTAL REVENUES - 38,102 38,102 1,038,062EXPENDITURES:Other - - - 600,709Capital Outlay - 2,652,495 2,652,495 17,437,353TOTAL EXPENDITURES - 2,652,495 2,652,495 18,038,062Excess (Deficiency) of RevenuesOver (Under) Expenditures - (2,614,393) (2,614,393) (17,000,000)OTHER FINANCING SOURCES (USES):Proceeds - Long Term Debt - 10,445,000 10,445,000 10,445,000Bond Discount - (97,812) (97,812) (97,812)Bond Costs - (347,188) (347,188) (347,188)Transfer In:Sports and Community Venue - 7,000,000 7,000,000 7,000,000TOTAL OTHER FINANCING SOURCES: - 17,000,000 17,000,000 17,000,000Net Change in Fund Balances $ - 14,385,607 14,385,607 -Fund Balances-Beginning -Fund Balances-Ending $ 14,385,607154

CITY OF LAREDO, TEXASAIRPORT CONSTRUCTION FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:FAA Grants $ 53,902,691 15,222,804 69,125,495 80,031,653Texas Department of Transportation 99,056 47,286 146,342 150,000Investment Income:Interest Earnings 168,474 10,814 179,288 189,403Miscellaneous:Other 288,313 101,679 389,992 341,324TOTAL REVENUES 54,458,534 15,382,583 69,841,117 80,712,380EXPENDITURES:Personnel 305,822 180,495 486,317 705,885Materials and Supplies 244,216 80,073 324,289 332,752Contractual Services 6,871,336 1,256,877 8,128,213 10,509,181Other 753,908 - 753,908 1,271,050Capital Outlay 47,495,507 16,424,697 63,920,204 77,776,048TOTAL EXPENDITURES 55,670,789 17,942,142 73,612,931 90,594,916Excess (Deficiency) of RevenuesOver (Under) Expenditures (1,212,255) (2,559,559) (3,771,814) (9,882,536)OTHER FINANCING SOURCES (USES):Proceeds - Bond Issues 6,135,000 - 6,135,000 6,135,000Sale of Land - 1,230,332 1,230,332 2,000,000Transfers In:International Airport 1,725,990 47,286 1,773,276 1,776,112Noise Abatement Lease Program 2,250,000 - 2,250,000 2,250,000Bond Cost (135,000) - (135,000) (135,000)Transfers Out:International Airport (623,014) - (623,014) (623,014)Debt Service (1,520,561) - (1,520,561) (1,520,562)TOTAL OTHER FINANCING SOURCES: 7,832,415 1,277,618 9,110,033 9,882,536Net Change in Fund Balances $ 6,620,160 (1,281,941) 5,338,219 -Fund Balances-Beginning 6,620,160Fund Balances-Ending $ 5,338,219155

CITY OF LAREDO, TEXASCAPITAL IMPROVEMENTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011Prior Current Total To ProjectYears Year Date AuthorizationREVENUES:Intergovernmental:Federal $ 150,390 35,880 186,270 1,496,295State 1,398,560 214,385 1,612,945 10,848,411Other 3,188 - 3,188 3,188Investment Income:Interest Earnings 5,107,009 48,890 5,155,899 5,126,950Discount Earnings 567 450 1,017 567Miscellaneous:Local Contributions 1,156,650 509,750 1,666,400 1,198,816Other 1,810,042 12,037 1,822,079 1,420,291TOTAL REVENUES 9,626,406 821,392 10,447,798 20,094,518EXPENDITURES:Materials and Supplies 1,146,386 45,144 1,191,530 1,800,383Contractual Services 712,900 574,098 1,286,998 2,301,367Other 105,942 - 105,942 1,328,132Capital Outlay 9,898,871 4,743,214 14,642,085 29,413,715TOTAL EXPENDITURES 11,864,099 5,362,456 17,226,555 34,843,597Excess (Deficiency) of RevenuesOver (Under) Expenditures (2,237,693) (4,541,064) (6,778,757) (14,749,079)OTHER FINANCING SOURCES (USES):Transfers In:General Fund 400,000 3,000,000 3,400,000 400,000Civic Center 3,000,000 - 3,000,000 3,000,000Hotel-Motel Occupancy Tax 368,000 - 368,000 368,0001998 C.O. Issue 324,498 - 324,498 324,4982006 C.O. Issue 83,840 - 83,840 326,5722007 C.O. Issue 26,985 - 26,985 225,5822008 C.O. Issue - - - 1,200,0002010 C.O. Issue - 750,000 750,000 750,000Bridge System 13,779,606 3,691,761 17,471,367 14,963,141Waterworks System - 1,375,144 1,375,144 1,375,144Information Technology $ 400,000 - 400,000 400,000(Continued)156

CITY OF LAREDO, TEXASCAPITAL IMPROVEMENTSSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES-BUDGET AND ACTUALFROM INCEPTION AND FOR THE YEAR ENDED SEPTEMBER 30, 2011(Continued)Prior Current Total To ProjectYears Year Date AuthorizationTransfers Out:General Fund $ (3,780,000) (3,889,751) (7,669,751) (7,669,751)Civic Center (54,101) - (54,101) (54,101)Capital Grants Fund (433,515) (120,548) (554,063) (860,006)TOTAL OTHER FINANCING SOURCES: 14,115,313 4,806,606 18,921,919 14,749,079Net Change in Fund Balances $ 11,877,620 265,542 12,143,162 -Fund Balances-Beginning 11,877,620Fund Balances-Ending $ 12,143,162157

CITY OF LAREDO, TEXASCANSECO ENDOWMENT FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGESIN FUND BALANCES - BUDGET AND ACTUAL - (BUDGET BASIS)Year ended September 30, 2011Actual VarianceOriginal Final Budget PositiveBudget Budget Actual Adjustments Basis (Negative)REVENUES:Interest Earnings $ 500 500 285 - 285 (215)TOTAL REVENUES 500 500 285 - 285 (215)EXPENDITURES:Materials and Supplies 500 500 - - - 500Contractual Services 2,000 2,000 - - - 2,000TOTAL EXPENDITURES 2,500 2,500 - - - 2,500Excess (Deficiency) of Revenues OverExpenditures (2,000) (2,000) 285 - 285 2,285Fund Balances at Beginning of Year 19,485 72,080 72,080 - 72,080 -.FUND BALANCES AT END OF YEAR $ 17,485 70,080 72,365 - 72,365 2,285158

INTERNAL SERVICE FUNDS

INTERNAL SERVICE FUNDSInternal Service funds account for the financing of goods or services provided by oneCity department or agency to other City departments or agencies, or to othergovernmental entities, on a cost- reimbursement basis.Internal Funds include:RISK MANAGEMENT FUND - to account for the transactions related to the partialself insurance plan for medical coverage for City employees.HEALTH AND BENEFITS FUND - to account for all expenses associated with theCity's partially self funded health benefits program.FLEET MANAGEMENT - to account for the providing of fuel and repair services to allcity owned vehicles and machinery, on a cost reimbursement basis.INFORMATION TECHNOLOGY - to account for the providing oftelecommunications services, iSeries technical support, and network technicalsupport.159

CITY OF LAREDO, TEXASINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF NET ASSETSSeptember 30, 2011RISK HEALTH & FLEET INFORMATIONMANAGEMENT BENEFITS MANAGEMENT TECH. TOTALASSETSCurrent Assets:Cash and Cash Equivalents:Cash $ 50 - 400 - 450Investments 3,062,797 - 1,546,468 661,955 5,271,220Accounts Receivable 1,190 461,434 8,114 125 470,863Accrued Interest Receivable 3,308 - 1,670 715 5,693Inventory - - 405,216 - 405,216Prepaid items 288,000 75,869 - - 363,869Total Current Assets 3,355,345 537,303 1,961,868 662,795 6,517,311Noncurrent Assets:Capital Assets:Buildings 1,188 - 400,000 - 401,188Improvements - - 11,391 - 11,391Machinery and Equipment - - 267,281 - 267,281Transportation Vehicles and Equipment 62,843 17,217 655,964 631,345 1,367,369Less Accumulated Depreciation (60,282) (17,217) (740,908) (317,891) (1,136,298)Total Capital Assets (Net ofAccumulated Depreciation) 3,749 - 593,728 313,454 910,931TOTAL ASSETS 3,359,094 537,303 2,555,596 976,249 7,428,242LIABILITIESCurrent Liabilities:Accounts Payable 367,389 603,771 477,417 36,597 1,485,174Claims and Judgments Payable 1,852,106 2,431,242 - - 4,283,348Due to Other Funds - 714,509 - - 714,509Accrued Wages and Employee Benefits 29,982 10,058 72,540 46,075 158,655Compensated Absences 20,900 1,142 46,108 34,730 102,880Deferred Revenue - 79,509 - - 79,509Total Current Liabilities 2,270,377 3,840,231 596,065 117,402 6,824,075Noncurrent Liabilities:Compensated Absences 35,337 628 83,511 91,277 210,753Total Noncurrent Liabilities 35,337 628 83,511 91,277 210,753TOTAL LIABILITIES 2,305,714 3,840,859 679,576 208,679 7,034,828NET ASSETSInvested in Capital Assets 3,749 - 593,728 313,454 910,931Unrestricted 1,049,631 (3,303,556) 1,282,292 454,116 (517,517)TOTAL NET ASSETS $ 1,053,380 (3,303,556) 1,876,020 767,570 393,414160

CITY OF LAREDO, TEXASINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENSES, ANDCHANGES IN FUND NET ASSETSYear ended September 30, 2011RISK HEALTH & FLEET INFORMATIONMANAGEMENT BENEFITS MANAGEMENT TECHNOLOGY TOTALOPERATING REVENUES:Charges for Services $ 4,307,774 19,652,051 9,893,545 2,675,978 36,529,348Reimbursements 176,733 642,356 186,264 22,496 1,027,849TOTAL OPERATING REVENUES 4,484,507 20,294,407 10,079,809 2,698,474 37,557,197OPERATING EXPENSES:Cost of Services 3,992,021 18,708,165 6,581,852 624,582 29,906,620Personnel Services 815,960 220,056 2,068,650 1,217,331 4,321,997Materials and Supplies 88,440 5,820 79,906 119,083 293,249Contractual Services 409,382 1,432,472 818,147 273,392 2,933,393Other - 741 97 2 840Depreciation 5,394 - 76,426 111,992 193,812TOTAL OPERATING EXPENSES 5,311,197 20,367,254 9,625,078 2,346,382 37,649,911Operating Income (Loss) (826,690) (72,847) 454,731 352,092 (92,714)NON-OPERATING REVENUES (EXPENSES):Intergovernmental - - - 125 125Investment Income:Interest Earnings 12,218 - 5,047 2,144 19,409Discount Earnings 27 - 95 - 122Gain/(Loss) on Sale of Assets - - (47,907) - (47,907)TOTAL NON-OPERATING REVENUES (EXPENSES) 12,245 - (42,765) 2,269 (28,251)Income Before Contributions and Transfers (814,445) (72,847) 411,966 354,361 (120,965)OPERATING TRANSFERS IN/(OUT):Transfers In 186,637 - - - 186,637Transfers Out (1,026,387) (186,637) (457,591) (300,000) (1,970,615)Change in Net Assets (1,654,195) (259,484) (45,625) 54,361 (1,904,943)Total Net Assets - Beginning 2,707,575 (3,044,072) 1,921,645 713,209 2,298,357TOTAL NET ASSETS- ENDING $ 1,053,380 (3,303,556) 1,876,020 767,570 393,414161

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CITY OF LAREDO, TEXASRISK MANAGEMENTSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 175,767Receipts from interfund services provided 4,307,774Payment to suppliers (4,020,002)Payment to employees (797,337)Payment for interfund services used (179,927)Net cash provided (used) by operating activities (513,725)CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Transfer from other funds 186,637Transfer to other funds (1,026,387)Net cash provided (used) by noncapital and relatedfinancing activities (839,750)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturity of investments 1,335,944Interest and dividends received 17,581Net cash provided (used) by investing activities 1,353,525Net increase (decrease) in cash and cash equivalents 50Cash and cash equivalents - October 1 -Cash and cash equivalents - September 30 $ 50Reconciliation of Operating income tonet cash provided (used) by operatingactivities:Operating income $ (826,690)Adjustments to reconcile operating income tonet cash provided (used)Depreciation expense 5,394(Increase) decrease in accounts receivable (966)(Increase) decrease in prepaid items (12,000)Increase (decrease) in accounts payable (22)Increase (decrease) in compensated absences payable 12,652Increase (decrease) in accrued wages and employee benefits 5,971Increase (decrease) in claims and judgments payable 301,936Total adjustments 312,965Net cash provided by operating activities $ (513,725)165

CITY OF LAREDO, TEXASHEALTH AND BENEFITSSCHEDULE OF REVENUES, EXPENSES, AND CHANGESIN FUND NET ASSETSYear ended September 30, 2011Budgeted AmountActualVarianceBudgetPositiveOriginal Final Actual Adjustment Basis (Negative)OPERATING REVENUES:Charges for Services $ 19,245,830 19,245,830 19,652,051 - 19,652,051 406,221Reimbursements 740,000 740,000 642,356 - 642,356 (97,644)TOTAL OPERATING REVENUES 19,985,830 19,985,830 20,294,407 - 20,294,407 308,577OPERATING EXPENSES:Cost of Services 17,454,809 17,454,809 18,708,165 - 18,708,165 (1,253,356)Personnel Services 226,447 226,447 220,056 (1,770) 218,286 8,161Materials and Supplies 10,749 10,749 5,820 - 5,820 4,929Contractual Services 1,454,629 1,454,629 1,432,472 - 1,432,472 22,157Other - - 741 - 741 (741)TOTAL OPERATING EXPENSES 19,146,634 19,146,634 20,367,254 (1,770) 20,365,484 (1,218,850)Operating Income (Loss) 839,196 839,196 (72,847) 1,770 (71,077) (910,273)Income Before Contributions and Transfers 839,196 839,196 (72,847) 1,770 (71,077) (910,273)OPERATING TRANSFERS IN/(OUT):Transfers Out:Risk Management Fund (186,637) (186,637) (186,637) - (186,637) -TOTAL OPERATING TRANSFERS IN/(OUT) (186,637) (186,637) (186,637) - (186,637) -Change in Net Assets 652,559 652,559 (259,484) 1,770 (257,714) (910,273)Total Net Assets - Beginning (3,044,072) (3,044,072) (3,044,072) - (3,044,072) -TOTAL NET ASSETS-ENDING $ (2,391,513) (2,391,513) (3,303,556) 1,770 (3,301,786) (910,273)166

CITY OF LAREDO, TEXASHEALTH AND BENEFITSSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 540,677Receipts from interfund services provided 19,652,051Payment to suppliers (19,768,269)Payment to employees (217,359)Payment for interfund services used (86,939)Net cash provided (used) by operating activities 120,161CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Transfer from other funds 66,476Transfer to other funds (186,637)Net cash provided (used) by noncapital and relatedfinancing activities (120,161)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturity of investments -Interest and dividends received -Net cash provided (used) by investing activities -Net increase (decrease) in cash and cash equivalents -Cash and cash equivalents - October 1 -Cash and cash equivalents - September 30 $ -Reconciliation of Operating income tonet cash provided (used) by operatingactivities:Operating income $ (72,847)Adjustments to reconcile operating income tonet cash provided (used)Depreciation expense -(Increase) decrease in accounts receivable (181,188)(Increase) decrease in prepaid items (9,394)Increase (decrease) in accounts payable 189,570Increase (decrease) in compensated absences payable 1,770Increase (decrease) in accrued wages and employee benefits 927Increase (decrease) in claims and judgements payable 111,814Increase (decrease) in deferred revenues 79,509Total adjustments 193,008Net cash provided by operating activities $ 120,161167

CITY OF LAREDO, TEXASINFORMATION TECHNOLOGYSCHEDULE OF REVENUES, EXPENSES, AND CHANGESIN FUND NET ASSETSYear ended September 30, 2011Budgeted AmountActualVarianceBudgetPositiveOriginal Budget Actual Adjustment Basis (Negative)OPERATING REVENUES:Charges for Services $ 2,671,922 2,671,922 2,675,978 - 2,675,978 4,056Reimbursements - - 22,496 - 22,496 22,496TOTAL OPERATING REVENUES 2,671,922 2,671,922 2,698,474 - 2,698,474 26,552OPERATING EXPENSES:Cost of Services 724,858 734,660 624,582 - 624,582 110,078Personnel Services 1,212,229 1,217,389 1,217,331 (2,059) 1,215,272 2,117Materials and Supplies 189,906 171,266 119,083 - 119,083 52,183Contractual Services 442,399 418,441 273,392 - 273,392 145,049Other - 5 2 - 2 3Capital Outlay 218,509 246,140 - 174,796 174,796 71,344Depreciation - - 111,992 (111,992) - -TOTAL OPERATING EXPENSES 2,787,901 2,787,901 2,346,382 60,745 2,407,127 380,774Operating Income (Loss) (115,979) (115,979) 352,092 (60,745) 291,347 407,326NON-OPERATING REVENUES (EXPENSES):Intergovernmental - - 125 - 125 125Investment Income:Interest Earnings 2,300 2,300 2,144 - 2,144 (156)TOTAL NON-OPERATING REVENUES (EXPENSES) 2,300 2,300 2,269 - 2,269 (31)Income (Loss) Before Contributions and Transfers (113,679) (113,679) 354,361 (60,745) 293,616 407,295OPERATING TRANSFERS IN/(OUT):Transfers Out:General Fund (300,000) (300,000) (300,000) - (300,000) -TOTAL OPERATING TRANSFERS IN/(OUT) (300,000) (300,000) (300,000) - (300,000) -Change in Net Assets (413,679) (413,679) 54,361 (60,745) (6,384) 407,295Total Net Assets - Beginning 713,209 713,209 713,209 - 713,209 -TOTAL NET ASSETS - ENDING $ 299,530 299,530 767,570 (60,745) 706,825 407,295170

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CAPITAL ASSETS

CITY OF LAREDO, TEXASCapital Assets Used in the Operation of Governmental FundsComparative Schedules by Source (1)September 30, 2011 and 2010Governmental Funds Capital Assets:2011 2010Land $ 76,466,440 70,500,680Buildings 161,492,611 148,099,410Improvements Other Than Buildings 530,407,019 483,009,704Vehicles 58,535,897 56,717,490Machinery & Equipment 32,231,179 31,033,499Construction in Progress 19,810,403 5,266,212Total Governmental Funds Capital Assets 878,943,549 794,626,995Investments in Governmental Funds Capital Assets by Source:General Fund 304,727,543 290,665,754Special Revenue Funds 192,468,166 185,872,318Capital Projects Funds 381,747,840 318,088,923Total Investments in Governmental Funds$ 878,943,549 794,626,995(1) This schedule presents only the capital asset balances related to governmental funds.Accordingly, the capital assets reported in internal service funds are excluded from the aboveamounts. Generally, the capital assets of internal service funds are included as governmentalactivities in the statement of net assets.173

CITY OF LAREDO, TEXASCapital Assets Used in the Operations of Governmental FundsSchedule by Function and Activity (1)For The Year Ended September 30, 2011IMPROVEMENTSMACHINERYFUNCTION AND ACTIVITY TOTAL LAND BUILDINGS O/T BLDGS TRANSPORTATION & EQUIPMENTGeneral Government:Mayor and City Council $ 9,908 - - - 9,908 -City Manager 5,003 - - - - 5,003Municipal Court 324,329 39,981 31,900 - - 252,448Building 166,140 - - - 144,140 22,000City Attorney 125 - - 125 - -City Secretary 58,134 - - - 14,643 43,491Tax Office 105,264 - - - - 105,264City Planning 92,442 - - - 15,125 77,317Finance 254,479 18,575 - - - 235,904Real Estate 7,351,313 5,812,313 1,539,000 - - -City Hall Maintenance 3,292,772 3,095,274 112,093 - - 85,405Engineering 282,197 - - - 188,201 93,996Information Technology 573,999 - - - - 573,999Communications and Support 48,432 - - - 13,968 34,464Community Development 22,973,052 6,259,659 2,931,599 11,842,411 1,802,110 137,273Telecommunications 322,422 - - 27,808 - 294,614General Government 35,860,011 15,225,802 4,614,592 11,870,344 2,188,095 1,961,178Public Safety:Police 7,666,821 - 6,133,672 - 843,093 690,056Police Trust Fund 14,812,064 - 920,960 - 11,124,706 2,766,398Auto Theft Task Force 190,661 - - - 89,669 100,992Narcotics 691,234 - - - 483,454 207,780Financial Task Force 450,349 - - - 237,906 212,443Special Police 2,186,913 - - - 7,134 2,179,779Laredo Border Violence 198,147 - - - 171,217 26,930Homeland Security Grant 2,212,928 - - - 382,984 1,829,944Fire 7,839,458 767,503 1,268,158 - 4,978,338 825,459Hazardous Materials 62,690 - 9,085 - 53,605 -Parking Meters 3,983,999 1,247,535 60,342 2,230,959 196,841 248,322911 Administration 606,345 - - - - 606,345911 - General Fund 52,056 - - - 33,590 18,466Communications 6,879,563 - - - - 6,879,563Special Fire Grants 1,192,736 - 47,015 - 850,000 295,721Traffic Safety 7,801,557 - 13,524 7,461,924 185,592 140,517Public Safety 56,827,521 2,015,038 8,452,756 9,692,883 19,638,129 17,028,715Public Works:Capital Improvements Projects 71,526,356 883,555 5,949,054 62,494,053 1,115,493 1,084,2011998 C.O. Issue 1,859,890 108,232 864,429 626,445 260,784 -Infrastructure Maint. 164,542 - - 105,993 43,569 14,980DPW 7,956,450 - 7,956,450 - - -Keep Laredo Beautiful 20,500 - - - 20,500 -New Fire Stations 2,741,302 - 2,148,486 - 592,816 -Fire Training Facility 1,835,790 455,769 1,184,184 - 28,287 167,5502000 CO Issue 7,980,197 933,003 3,278,920 3,768,274 - -LEC Construction Project 33,348,399 258,500 33,089,899 - - -2002 CO Issue 5,361,405 4,548,595 812,810 - - -2003 CO Issue 3,725,268 31,022 1,584,737 2,109,509 - -2005 CO Issue 14,044,346 1,493,130 1,011,981 10,004,895 1,393,309 141,0312006 CO Issue 15,458,075 - 5,348,880 9,664,535 444,660 -2007 CO Issue 38,067,298 296,343 7,832,559 20,426,093 8,529,978 982,3252008 CO Issue 18,217,743 500,233 7,813,402 7,186,330 2,709,095 8,6832009 CO Issue 9,836,046 - 2,602,315 6,265,699 968,032 -2010 CO Issue 278,880 38,253 - 240,627 - -FAA-Noise Abatement 18,944,149 17,605,254 1,338,895 - - -Airport Const. Fund. 83,060,494 9,956,304 1,546,465 67,719,097 1,533,518 2,305,110Ryan Street Railroad Bridge 668,019 - - 668,019 - -Streets of Laredo Urban Mall 1,158,524 - - 1,158,524 - -Contractual Obligations 13,650,108 - 61,528 - 11,179,501 2,409,079Parks Capital Grants 2,113,793 498,762 - 1,615,031 - -Capital Grants 22,914,369 - 198,400 22,715,969 - -Public Works 251,218,808 3,930,255 3,769,001 239,480,603 3,949,703 89,246Public Works $ 626,150,751 41,537,210 88,392,395 456,249,696 32,769,245 7,202,205(Continued)174

CITY OF LAREDO, TEXASCapital Assets Used in the Operations of Governmental FundsSchedule by Function and Activity (1)For The Year Ended September 30, 2011IMPROVEMENTSMACHINERYFUNCTION AND ACTIVITY TOTAL LAND BUILDINGS O/T BLDGS TRANSPORTATION & EQUIPMENTHealth & Welfare:Health $ 7,755,184 421,278 4,400,991 171,500 272,147 2,489,268Noise Abtm. Lease 95,864 - - - 95,864 -Emergency Shelter Grant 416 - - - - 416A.R.R.A.-CD 975,026 - - 975,026 - -Environmental Services 24,369,524 3,488,604 1,358,380 17,765,647 1,388,739 368,154Health & Welfare 33,196,014 3,909,882 5,759,371 18,912,173 1,756,750 2,857,838Cultural & Recreational:Parks & Recreation 8,015,709 4,078,991 2,548,793 9,850 1,149,811 228,264Library 6,918,390 - 6,268,902 33,000 69,770 546,718New Public Library 56,167 - 22,346 - - 33,821Cemetery 92,839 - 7,900 - 57,689 27,250Friends of the Library 801,866 - - - - 801,866Civic Center 1,644,832 - 1,407,123 6,118 66,810 164,781Public Access Channel 2,666,307 - 1,406,518 14,624 50,204 1,194,961Mercado 1,166,850 - 1,162,235 - 4,615 -Convention & Visitor's Bureau 99,132 - 17,300 - 81,832 -Sports & Community Venue 4,703,101 4,604,852 75,561 - - 22,688Recreation Fund 139,467 - - - 139,467 -Veterans Field 446,958 - 340,396 - 68,117 38,445Cultural & Recreational 26,751,618 8,683,843 13,257,074 63,592 1,688,315 3,058,794Air Transportation Services:Airport 80,347,231 5,094,665 41,016,423 33,618,331 495,363 122,449Air Transportation Services 80,347,231 5,094,665 41,016,423 33,618,331 495,363 122,449Total Assets in service 859,133,146 76,466,440 161,492,611 530,407,019 58,535,897 32,231,179Construction in Progress 19,810,403Total Governmental FundsCapital Assets $ 878,943,549(1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds areexcluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets.175

CITY OF LAREDO, TEXASCapital Assets Used in the Operation of Governmental FundsSchedule of Changes by Function and Activity (1)For The Year Ended September 30, 2011BALANCE AT DISPOSALS/ BALANCE ATFUNCTION AND ACTIVITY BEGINNING OF YEAR ADDITIONS TRANSFERS END OF YEARGeneral Government:Mayor and City Council $ 9,908 - - 9,908City Manager 5,003 - - 5,003Municipal Court 316,334 7,995 - 324,329Building Inspections 202,552 30,390 (66,802) 166,140City Attorney 125 - - 125City Secretary 58,134 - - 58,134Tax Office 105,264 - - 105,264City Planning 92,442 - - 92,442Finance 254,479 - - 254,479Real Estate 2,496,997 6,084,648 (1,230,332) 7,351,313City Hall Maintenance 3,292,772 - - 3,292,772Engineering 304,063 - (21,866) 282,197Information Technology 573,999 - - 573,999Communications and Support 48,432 - - 48,432Community Development 22,408,047 625,281 (60,276) 22,973,052Telecommunications 338,162 - (15,740) 322,422General Government 30,506,713 6,748,314 (1,395,016) 35,860,011Public Safety:Police 8,065,197 10,214 (408,590) 7,666,821Police Trust Fund 12,886,890 3,351,542 (1,426,368) 14,812,064Auto Theft Task Force 190,661 - - 190,661Narcotics 691,234 - - 691,234Financial Task Force 202,858 247,491 - 450,349Special Police 2,017,430 169,483 - 2,186,913Laredo Border Violence 248,777 - (50,630) 198,147Homeland Security Grant 1,953,445 259,483 - 2,212,928Fire 7,839,458 - - 7,839,458Hazardous Materials 62,690 - - 62,690Parking Meters 3,936,217 47,782 - 3,983,999911 Administration 565,925 40,420 - 606,345911 - General Fund 52,056 - - 52,056Communication System 6,879,563 - - 6,879,563Special Fire Grants 1,192,736 - - 1,192,736Traffic Safety 7,837,267 5,826 (41,536) 7,801,557Public Safety 54,622,404 4,132,241 (1,927,124) 56,827,521Public Works:Capital Improvements Project 67,077,188 4,317,470 131,698 71,526,3561998 CO Issue 1,859,890 - - 1,859,890Infrastructure Maint. 164,542 - - 164,542DPW Infrastructure 7,956,450 - - 7,956,450Keep Laredo Beautiful 20,500 - - 20,500New Fire Stations 2,741,302 - - 2,741,302Fire Training Facility 1,835,790 - - 1,835,7902000 CO Issue 7,946,912 33,285 - 7,980,197LEC Construction Project 33,348,399 - - 33,348,3992002 CO Issue 4,548,595 812,810 - 5,361,4052003 CO Issue 3,725,268 - - 3,725,2682005 CO Issue 13,943,334 101,012 - 14,044,3462006 CO Issue 14,545,716 818,880 93,479 15,458,0752007 CO Issue 33,684,799 4,138,132 244,367 38,067,2982008 CO Issue 12,669,809 4,799,214 748,720 18,217,7432009 CO Issue 2,913,236 4,619,924 2,302,886 9,836,0462010 CO Issue - 278,880 - 278,880FAA-Noise Abatement 18,944,149 - - 18,944,149Airport Construction Fund 67,277,138 15,783,356 - 83,060,494Ryan Street Railroad Bridge 668,019 - - 668,019Streets of Laredo Urban Mall 1,158,524 - - 1,158,524Contractual Obligation 14,150,811 711,898 (1,212,601) 13,650,108Parks Capital Grants 1,167,179 946,614 - 2,113,793Capital Grants 13,852,412 9,061,957 - 22,914,369Public Works 242,021,265 9,433,894 (236,351) 251,218,808Public Works $ 568,221,227 55,857,326 2,072,198 626,150,751(Continued)176

CITY OF LAREDO, TEXASCapital Assets Used in the Operation of Governmental FundsSchedule of Changes by Function and Activity (1)For The Year Ended September 30, 2011(Continued)BALANCE AT DISPOSALS/ BALANCE ATFUNCTION AND ACTIVITY BEGINNING OF YEAR ADDITIONS TRANSFERS END OF YEARHealth & Welfare:Health $ 7,131,860 623,324 - 7,755,184Noise Abatement Lease 95,864 - - 95,864Emergency Shelter Grant 416 - - 416A.R.R.A.- C.D. 975,026 - - 975,026Environmental Services 19,866,883 3,694,883 807,758 24,369,524Health & Welfare 28,070,049 4,318,207 807,758 33,196,014Cultural & Recreational:Parks & Recreation 7,787,173 6,083 222,453 8,015,709Library 6,918,390 - - 6,918,390New Public Library 56,167 - - 56,167Cemetery 92,839 - - 92,839Friends of the Library 801,866 - - 801,866Civic Center 1,644,832 - - 1,644,832Public Access Channel 2,509,147 157,160 - 2,666,307Mercado 1,166,850 - - 1,166,850Convention & Visitors Bureau 41,687 57,445 - 99,132Sports & Community Venue 4,680,413 22,688 - 4,703,101Recreation Fund 139,467 - - 139,467Veterans Field 446,958 - - 446,958Cultural & Recreational 26,285,789 243,376 222,453 26,751,618Air Transportation Services:Airport 81,654,601 70,491 (1,377,861) 80,347,231Air Transportation Services 81,654,601 70,491 (1,377,861) 80,347,231Total Assets In Service 789,360,783 71,369,955 (1,597,592) 859,133,146Construction in Progress 5,266,212 18,911,079 (4,366,888) 19,810,403Total Governmental FundsCapital Assets $ 794,626,995 90,281,034 (5,964,480) 878,943,549(1) This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reportedin internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are includedas governmental activities in the statement of net assets.177

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ENTERPRISE FUNDS

ENTERPRISE FUNDSEnterprise funds account for the acquisition, operation and maintenance of the City'sfacilities and services which are entirely or predominantly supported by user charges orthose for which the City has decided that periodic determination of the revenues earned,expenses incurred, and/or net income is appropriate for capital maintenance, publicpolicy, management control, accountability and or other purposes. All activitiesnecessary to provide services are accounted for in these funds, including, but not limitedto, administration, operations, and maintenance.Enterprise Funds include:MUNICIPAL TRANSIT SYSTEM - to account for the proceeds from the City's TransitSystem and a grant from the U.S. Department of Transportation, Urban MassTransportation used for operating and maintaining the Transit System, whichprovides 22 bus routes.BRIDGE SYSTEM - to account for toll proceeds from four international bridges and therelated operations, maintenance and debt service.MUNICIPAL HOUSING CORPORATION - to account for proceeds derived from210 dwelling units of which 7% is received from Housing Urban DevelopmentSection 8 for rental assistance for low income housing and the related operationaland maintenance disbursements.WATERWORKS SYSTEM - to account for the operations, maintenance and debtservice from three water treatment plants and seventeen booster stations and therelated revenue received from 62,195 customers.SEWER SYSTEM - to account for the operations, maintenance and debt service of theCity's five sewage treatment plants and its related revenue received from 58,726customers.SOLID WASTE FUND – to account for the landfill and recycling center operations andrevenues collected from landfill fees and Federal and State mandates fees, and forthe construction of the municipal landfill.179

CITY OF LAREDO, TEXASNONMAJOR ENTERPRISE FUNDSSTATEMENT OF NET ASSETSSeptember 30, 2011MUNICIPAL MUNICIPAL SOLIDTRANSIT HOUSING WASTESYSTEM CORPORATION MANAGEMENT TOTALSASSETSCurrent Assets:Cash and Cash Equivalents:Cash $ 2,350 200 1,900 4,450Investments 3,166,670 1,696,166 7,988,278 12,851,114Receivables, net of allowances:Accrued Interest 3,115 1,832 5,896 10,843Accounts 12,657 20,613 1,183,677 1,216,947Due From Other Funds - - 3,020,974 3,020,974Due From Other Governments 867,247 - - 867,247Inventory, at cost 530,223 - 2,883 533,106Total Current Assets 4,582,262 1,718,811 12,203,608 18,504,681Noncurrent Assets:Restricted Assets:Investments 242,243 - 9,482,474 9,724,717Accrued Interest Receivable - - 117 117Due From Other Funds - - 1,405,067 1,405,067Total Restricted Assets 242,243 - 10,887,658 11,129,901Capital Assets:Transportation Vehicles and Equipment 25,979,725 157,988 22,680,653 48,818,366Buildings 14,350,868 3,623,431 1,069,795 19,044,094Improvements 9,072,908 131,362 3,597,929 12,802,199Land and Improvements 9,521,557 278,885 624,668 10,425,110Construction in Progress 1,145,820 - - 1,145,820Less Accumulated Depreciation (21,619,439) (3,439,316) (17,461,691) (42,520,446)Total Capital Assets (net ofaccumulated depreciation) 38,451,439 752,350 10,511,354 49,715,143Other Assets:Unamortized Bond Issuance Costs - - 117,790 117,790Total Noncurrent Assets 38,693,682 752,350 21,516,802 60,962,834TOTAL ASSETS $ 43,275,944 2,471,161 33,720,410 79,467,515LIABILITIESCurrent Liabilities:Accounts Payable $ 293,270 24,894 215,061 533,225Retainage Payable 12,989 - - 12,989Contracts Payable 116,904 5,369 - 122,273Due to Other Funds - - 1,947,427 1,947,427Accrued Interest Payable 43,070 - 91,800 134,870Accrued Wages and Employee Benefits 326,110 17,513 207,991 551,614Compensated Absences 131,106 10,458 125,705 267,269Customer Deposits 7,960 78,931 - 86,891Deferred Revenue - 50,779 1,763 52,542General Obligation Bonds 411,535 - 50,219 461,754Certificates of Obligation 530,000 - 899,060 1,429,060Total Current Liabilities 1,872,944 187,944 3,539,026 5,599,914Noncurrent Liabilities:General Obligation Bonds 435,531 - 3,426,802 3,862,333Certificates of Obligation 6,860,000 - 8,686,103 15,546,103Closure and Post Closure - - 10,449,569 10,449,569Compensated Absences 78,826 12,038 274,959 365,823Total Noncurrent Liabilities 7,374,357 12,038 22,837,433 30,223,828TOTAL LIABILITIES 9,247,301 199,982 26,376,459 35,823,742NET ASSETSInvested in Capital Assets, Net of Related Debt 30,695,834 752,350 324,983 31,773,167Unrestricted 3,332,809 1,518,829 7,018,968 11,870,606TOTAL NET ASSETS $ 34,028,643 2,271,179 7,343,951 43,643,773180

CITY OF LAREDO, TEXASNONMAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENSES, ANDCHANGES IN NET ASSETSYear ended September 30, 2011MUNICIPAL MUNICIPAL SOLIDTRANSIT HOUSING WASTESYSTEM CORPORATION MANAGEMENT TOTALSOPERATING REVENUES:Charges for Services $ 3,348,940 123,084 16,588,836 20,060,860Rental of Facilities 519,379 1,256,422 - 1,775,801Miscellaneous 103,389 33,468 43,088 179,945TOTAL OPERATING REVENUES 3,971,708 1,412,974 16,631,924 22,016,606OPERATING EXPENSES:Personnel Services 8,749,732 513,787 5,425,940 14,689,459Materials and Supplies 2,143,718 134,948 1,817,255 4,095,921Contractual Services 1,399,287 595,003 5,208,511 7,202,801Other 82,606 74,529 497,445 654,580Total Operating Expenses BeforeDepreciation 12,375,343 1,318,267 12,949,151 26,642,761Depreciation Expense 2,254,232 109,308 2,196,316 4,559,856TOTAL OPERATING EXPENSES 14,629,575 1,427,575 15,145,467 31,202,617Operating Income (Loss) (10,657,867) (14,601) 1,486,457 (9,186,011)NONOPERATING REVENUES (EXPENSES):Investment Income:Interest Earnings 11,363 7,335 17,767 36,465Interest Earnings - Restricted 717 - 67,713 68,430Premiums - - 187,452 187,452Discount Earnings 118 - 6,513 6,631Miscellaneous - - 16,355 16,355Sales Tax 6,311,745 - - 6,311,745Gain (Loss) on Sale of Assets 6,724 - 14,600 21,324Interest Expense (363,842) - (595,437) (959,279)Federal Operating Grant 3,588,224 - - 3,588,224Fiscal Agent Fees - - (125) (125)Bond Issuance Cost Amortized - - (37,745) (37,745)State Dept. of Highways 671,417 - - 671,417Construction (16,880) - - (16,880)Other (645) - - (645)TOTAL NONOPERATING REVENUES(EXPENSES) 10,208,941 7,335 (322,907) 9,893,369Income (Loss) Before Contributionsand Transfers (448,926) (7,266) 1,163,550 707,358Capital Contributions-Grants 4,990,418 - - 4,990,418Transfers In:Contractual Obligations Fund 288 - - 288Change in Net Assets 4,541,780 (7,266) 1,163,550 5,698,064Total Net Assets-Beginning 29,486,863 2,278,445 6,180,401 37,945,709Total Net Assets-Ending $ 34,028,643 2,271,179 7,343,951 43,643,773181

CITY OF LAREDO, TEXASNONMAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF CASH FLOWSYear ended September 30, 2011MUNICIPAL MUNICIPAL SOLIDTRANSIT HOUSING WASTESYSTEM CORPORATION MANAGEMENT TOTALSCASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 3,972,926 1,448,137 16,734,410 22,155,473Receipts from interfund services provided - - 177,180 177,180Payments to suppliers (3,642,068) (348,076) (8,140,254) (12,130,398)Payments to employees (8,726,945) (512,396) (1,330,326) (10,569,667)Payments for interfund services used (90,820) (456,625) (4,053,687) (4,601,132)Net cash provided (used) by operating activities (8,486,907) 131,040 3,387,323 (4,968,544)CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Transfer to other funds - - 1,839,678 1,839,678Subsidy from federal and state grants 3,700,152 - - 3,700,152Sales Tax 6,311,745 - - 6,311,745Transfer from other funds 248,516 - 321,416 569,932Net cash provided (used) by noncapitaland related financing activities 10,260,413 - 2,161,094 12,421,507CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Proceeds from Capital Debt - - 3,156,553 3,156,553Subsidy from federal and state grants 4,990,418 - 14,206 5,004,624Purchases of capital assets - (37,138) (2,303,017) (2,340,155)Acquisition and construction of capital assets (5,602,884) - - (5,602,884)Principal paid on capital debt (902,436) - (4,098,080) (5,000,516)Interest paid on capital debt (368,587) - (582,653) (951,240)Proceeds from sales of capital assets 6,724 - 14,600 21,324Net cash provided (used) by capitaland related financing activities (1,876,765) (37,138) (3,798,391) (5,712,294)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investments 79,200 (102,537) (1,843,302) (1,866,639)Interest and dividends received 14,801 8,635 93,426 116,862Net cash provided (used) by investing activities 94,001 (93,902) (1,749,876) (1,749,777)Net increase (decrease) in cashand cash equivalents (9,258) - 150 (9,108)Cash and cash equivalents, October 1 11,608 200 1,750 13,558Cash and cash equivalents, September 30 $ 2,350 200 1,900 4,450Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ (10,657,867) (14,601) 1,486,457 (9,186,011)Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 2,254,232 109,308 2,196,316 4,559,856(Increase) decrease in landfill closure and post closure costs - - 462,989 462,989(Increase) decrease in accounts receivable (11,874) (212) 258,538 246,452Increase in allowance for uncollectible accounts 12,639 31,430 22,381 66,450(Increase) decrease in inventories 23,725 - (865) 22,860Increase in customer deposits 475 652 - 1,127Increase (decrease) in accounts payable (131,002) (221) (1,079,167) (1,210,390)Increase (decrease) in deferred revenues (22) 3,293 (1,253) 2,018Increase (decrease) in compensated absences payable 3,257 (234) 9,659 12,682Increase (decrease) in accrued wages and employee benefits 19,530 1,625 32,268 53,423Total adjustments 2,170,960 145,641 1,900,866 4,217,467Net cash provided (used) by operating activities $ (8,486,907) 131,040 3,387,323 (4,968,544)Noncash investing, capital, and financingactivities:Current closure and post closure costs - - 462,989 462,989Bond issuance cost amortized - - 29,870 29,870Accrued Interest Payable 4,745 - 12,909 17,654182

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CITY OF LAREDO, TEXASMUNICIPAL TRANSIT SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)OPERATING REVENUES:Charges for Services $ 3,663,566 3,663,566 3,348,940 - 3,348,940 (314,626)Miscellaneous 88,612 88,612 103,389 - 103,389 14,777Rental of Facilities 542,089 542,089 519,379 - 519,379 (22,710)TOTAL OPERATING REVENUES 4,294,267 4,294,267 3,971,708 - 3,971,708 (322,559)OPERATING EXPENSES:Opt-Fixed Route:Personnel Services 6,298,673 6,016,209 5,386,609 (690) 5,385,919 630,290Materials and Supplies 1,054,448 905,622 903,773 - 903,773 1,849Contractual Services 260,791 289,447 259,080 - 259,080 30,367Other 42,296 64,101 58,091 - 58,091 6,010Total Opt-Fixed Route 7,656,208 7,275,379 6,607,553 (690) 6,606,863 668,516Opt-Para Transit:Personnel Services 1,071,337 1,107,579 1,022,124 (1,118) 1,021,006 86,573Materials and Supplies 155,338 170,738 166,374 - 166,374 4,364Contractual Services 97,750 104,584 93,784 - 93,784 10,800Other 10,579 12,344 11,817 - 11,817 527Total Opt-Para Transit 1,335,004 1,395,245 1,294,099 (1,118) 1,292,981 102,264Maint-Fixed Route:Personnel Services 1,596,510 1,616,234 1,298,162 2,727 1,300,889 315,345Materials and Supplies 892,060 842,965 887,044 - 887,044 (44,079)Contractual Services 176,123 150,380 130,405 - 130,405 19,975Total Maint-Fixed Route 2,664,693 2,609,579 2,315,611 2,727 2,318,338 291,241Maint-Para Transit:Personnel Services 222,598 228,332 208,905 (400) 208,505 19,827Materials and Supplies 59,786 55,172 94,651 - 94,651 (39,479)Contractual Services 24,332 17,381 15,598 - 15,598 1,783Total Maint-Para Transit 306,716 300,885 319,154 (400) 318,754 (17,869)Training and Safety:Personnel Services 65,042 64,997 62,206 (1,552) 60,654 4,343Materials and Supplies 2,334 457 421 - 421 36Contractual Services 573 333 333 - 333 -Total Training and Safety 67,949 65,787 62,960 (1,552) 61,408 4,379Building/Grounds:Personnel Services 284,962 280,462 163,142 (540) 162,602 117,860Materials and Supplies 46,718 59,535 46,155 - 46,155 13,380Contractual Services 273,208 310,181 171,704 - 171,704 138,477Total Building/Grounds $ 604,888 650,178 381,001 (540) 380,461 269,717(Continued)184

CITY OF LAREDO, TEXASMUNICIPAL TRANSIT SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011(Continued)Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)Bus Stop/Shelters:Personnel Services $ 110,836 109,336 100,601 (4,099) 96,502 12,834Materials and Supplies 43 - - - - -Contractual Services 4,272 4,731 4,730 - 4,730 1Total Bus Stop/Shelters 115,151 114,067 105,331 (4,099) 101,232 12,835General Administration:Personnel Services 113,766 70,766 44,928 (942) 43,986 26,780Materials and Supplies 7,999 11,776 9,869 - 9,869 1,907Contractual Services 464,993 841,159 510,668 - 510,668 330,491Other 260 260 12,518 - 12,518 (12,258)Total General Administration 587,018 923,961 577,983 (942) 577,041 346,920Planning:Personnel Services 58,701 58,996 53,530 (1,431) 52,099 6,897Contractual Services 1,663 1,731 1,726 - 1,726 5Total Planning 60,364 60,727 55,256 (1,431) 53,825 6,902Marketing:Personnel Services 80,477 85,704 76,762 (527) 76,235 9,469Materials and Supplies 10,741 7,998 892 - 892 7,106Contractual Services 22,109 24,479 21,684 - 21,684 2,795Total Marketing 113,327 118,181 99,338 (527) 98,811 19,370Customer Service:Personnel Services 97,040 95,540 80,746 2,412 83,158 12,382Materials and Supplies 6,773 5,615 4,464 - 4,464 1,151Contractual Services 4,451 4,438 4,410 - 4,410 28Total Customer Service 108,264 105,593 89,620 2,412 92,032 13,561Transit Center Building:Personnel Services 260,646 260,646 186,468 (228) 186,240 74,406Materials and Supplies 28,376 33,696 27,794 - 27,794 5,902Contractual Services 201,003 191,395 146,442 - 146,442 44,953Total General Administration 490,025 485,737 360,704 (228) 360,476 125,261Transit Center Facility:Personnel Services 73,610 73,610 65,549 (968) 64,581 9,029Materials and Supplies 2,353 2,353 2,281 - 2,281 72Contractual Services 34,259 38,547 38,723 - 38,723 (176)Other - - 180 - 180 (180)Total Transit Center Facility 110,222 114,510 106,733 (968) 105,765 8,745Total Operating Expenses BeforeDepreciation 14,219,829 14,219,829 12,375,343 (7,356) 12,367,987 1,851,842Depreciation - - 2,254,232 (2,254,232) - -TOTAL OPERATING EXPENSES 14,219,829 14,219,829 14,629,575 (2,261,588) 12,367,987 1,851,842Operating Income (Loss) $ (9,925,562) (9,925,562) (10,657,867) 2,261,588 (8,396,279) 1,529,283(Continued)185

CITY OF LAREDO, TEXASMUNICIPAL TRANSIT SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011(Continued)Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)NONOPERATING REVENUES (EXPENSES):Investment Income:Interest Earnings $ 16,550 16,550 11,363 - 11,363 (5,187)Interest Earnings-Restricted 15,409 15,409 717 - 717 (14,692)Discount Earnings 97 97 118 - 118 21Sales Tax 5,834,645 5,834,645 6,311,745 - 6,311,745 477,100Loss on Sale of Equipment 5,000 5,000 6,724 - 6,724 1,724Interest Expense (368,589) (368,589) (363,842) (4,745) (368,587) 2Principal Paid Revenue Bonds (902,436) (902,436) - (902,436) (902,436) -FTA Operating Grant 4,299,663 5,704,808 3,588,224 - 3,588,224 (2,116,584)State Dept. of Highways 667,509 671,226 671,417 - 671,417 191Construction (360,834) (14,675,760) (16,880) (5,585,359) (5,602,239) 9,073,521Other Non-Operating Expenses (818,619) (1,421,499) (645) - (645) 1,420,854TOTAL NONOPERATING REVENUESAND (EXPENSES) 8,388,395 (5,120,549) 10,208,941 (6,492,540) 3,716,401 8,836,950Income (Loss) Before Contributionsand Transfers (1,537,167) (15,046,111) (448,926) (4,230,952) (4,679,878) 10,366,233Capital Contributions:Federal Capital Grant - 11,038,258 4,675,901 - 4,675,901 (6,362,357)State Capital Grant - 535,942 314,517 - 314,517 (221,425)Transfer In:Transit Sales Tax 4,775,581 3,809,969 - 4,661,642 4,661,642 851,673Contractual Obligations Fund - 175,400 288 - 288 (175,112)Transfers Out:Transit Operations (4,775,581) (3,366,719) - (4,218,392) (4,218,392) (851,673)Capital and Planning - (443,250) - (443,250) (443,250) -Change in Net Assets (1,537,167) (3,296,511) 4,541,780 (4,230,952) 310,828 3,607,339Total Net Assets-Beginning 29,486,863 29,486,863 29,486,863 - 29,486,863 -Total Net Assets-Ending $ 27,949,696 26,190,352 34,028,643 (4,230,952) 29,797,691 3,607,339186

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CITY OF LAREDO, TEXASMUNICIPAL TRANSIT SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 3,972,926Payments to suppliers (3,642,068)Payments to employees (8,726,945)Payments for interfund services used (90,820)Net cash provided (used) by operating activities (8,486,907)CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Advances from other funds 248,516Subsidy from federal and state grants 3,700,152Sales Tax 6,311,745Net cash provided (used) by noncapitaland related financing activities 10,260,413CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Subsidy from federal and state grants 4,990,418Acquisition and construction of capital assets (5,602,884)Principal paid on capital debt (902,436)Interest paid on capital debt (368,587)Proceeds from sales of capital assets 6,724Net cash provided (used) by capitaland related financing activities (1,876,765)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investments 79,200Interest and dividends received 14,801Net cash provided (used) by investing activities 94,001Net increase (decrease) in cash and cash equivalents (9,258)Cash and cash equivalents, October 1 11,608Cash and cash equivalents, September 30 $ 2,350(Continued)188

CITY OF LAREDO, TEXASMUNICIPAL TRANSIT SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011(Continued)Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ (10,657,867)Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 2,254,232(Increase) decrease in accounts receivable (11,874)Increase in allowance for uncollectible accounts 12,639(Increase) decrease in inventories 23,725Increase in customer deposits 475Increase (decrease) in accounts payable (131,002)Increase (decrease) in deferred revenues (22)Increase (decrease) in compensated absences payable 3,257Increase (decrease) in accrued wages and employee benefits 19,530Total adjustments 2,170,960Net cash provided (used) by operating activities $ (8,486,907)Noncash investing, capital and financingactivities:Accrued Interest Payable 4,745189

CITY OF LAREDO, TEXASBRIDGE SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)OPERATING REVENUES:Rental of Facilities $ 2,659,822 2,659,822 2,734,637 - 2,734,637 74,815Toll Receipts 43,507,565 43,507,565 43,638,202 - 43,638,202 130,637Miscellaneous 77,086 77,086 59,631 - 59,631 (17,455)TOTAL OPERATING REVENUES 46,244,473 46,244,473 46,432,470 - 46,432,470 187,997OPERATING EXPENSES:Laredo Bridge Operations:Personnel Services 2,202,100 2,205,231 1,954,599 (12,512) 1,942,087 263,144Materials and Supplies 333,671 387,271 360,230 - 360,230 27,041Contractual Services 24,293,507 24,474,749 24,166,205 - 24,166,205 308,544Other 289,232 41,728 25,688 (258) 25,430 16,298Capital Outlay 8,787 40,787 - 38,837 38,837 1,950Total Laredo Bridge Operations 27,127,297 27,149,766 26,506,722 26,067 26,532,789 616,977Bridge II Operations:Personnel Services 2,279,422 2,279,422 2,191,771 (4,691) 2,187,080 92,342Materials and Supplies 91,795 93,095 70,094 - 70,094 23,001Contractual Services 466,482 480,482 356,808 - 356,808 123,674Capital Outlay - 44,000 - 38,934 38,934 5,066Total Bridge II Operations 2,837,699 2,896,999 2,618,673 34,243 2,652,916 244,083Colombia Bridge Operations:Personnel Services 1,265,317 1,265,317 1,217,596 (13,191) 1,204,405 60,912Materials and Supplies 28,864 28,964 26,621 - 26,621 2,343Contractual Services 238,791 243,841 218,342 - 218,342 25,499Capital Outlay - 17,000 - 9,877 9,877 7,123Total Colombia Bridge Operations 1,532,972 1,555,122 1,462,559 (3,314) 1,459,245 95,877Central America Convention:Contractual Services 50,384 50,384 3 - 3 50,381Total Central America Convention 50,384 50,384 3 - 3 50,381Fourth Bridge Operations:Personnel Services 2,223,687 2,223,687 2,087,607 (19,829) 2,067,778 155,909Materials and Supplies 135,537 141,037 109,432 - 109,432 31,605Contractual Services 532,080 577,704 635,824 - 635,824 (58,120)Capital Outlay - 74,000 - 38,700 38,700 35,300Total Fourth Bridge Operations 2,891,304 3,016,428 2,832,863 18,871 2,851,734 164,694Fifth Bridge:Contractual Services 106,807 106,807 - - - 106,807Total Fifth Bridge 106,807 106,807 - - - 106,807Total Operating Expenses BeforeDepreciation 34,546,463 34,775,506 33,420,820 75,867 33,496,687 1,278,819Depreciation - - 4,192,722 (4,192,722) - --TOTAL OPERATING EXPENSES 34,546,463 34,775,506 37,613,542 (4,116,855) 33,496,687 1,278,819Operating Income (Loss) $ 11,698,010 11,468,967 8,818,928 4,116,855 12,935,783 1,466,816(Continued)190

CITY OF LAREDO, TEXASBRIDGE SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011(Continued)Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)NONOPERATING REVENUES (EXPENSES):Intergovernmental $ - 229,043 13,727 - 13,727 (215,316)Investment Income:Interest Earnings 50,580 50,580 23,032 - 23,032 (27,548)Interest Earnings - Restricted 123,020 123,020 55,901 - 55,901 (67,119)Gain/(Loss) On Sale of Assets - - 2,608 - 2,608 2,608Interest Expense (3,697,162) (3,697,162) (3,697,171) - (3,697,171) (9)Principal Paid Revenue Bonds (5,087,444) (5,087,444) - (5,087,435) (5,087,435) 9Fiscal Agent Fees - - (1,300) - (1,300) (1,300)Bond Issuance Cost Amortized - - (137,365) 137,365 - -Construction (30,491) (8,221,541) (103,709) (3,203,636) (3,307,345) 4,914,196TOTAL NONOPERATING REVENUES(EXPENSES) (8,641,497) (16,603,504) (3,844,277) (8,153,706) (11,997,983) 4,605,521Income (Loss) Before Contributionsand Transfers 3,056,513 (5,134,537) 4,974,651 (4,036,851) 937,800 6,072,337Transfers In:Bridge Operating Fund 6,618,760 6,618,760 - 7,155,815 7,155,815 537,055Transfers Out:Capital Improvements Fund (2,500,347) (2,500,347) (3,691,761) - (3,691,761) (1,191,414)Debt Service (776,347) (776,347) (776,347) - (776,347) -Bridge Construction Projects - - - (500,000) (500,000) (500,000)Bridge Debt Service (6,618,760) (6,618,760) - (6,655,815) (6,655,815) (37,055)Change in Net Assets (220,181) (8,411,231) 506,543 (4,036,851) (3,530,308) 4,880,923Total Net Assets-Beginning 33,251,152 33,251,152 33,251,152 - 33,251,152 -Total Net Assets-Ending $ 33,030,971 24,839,921 33,757,695 (4,036,851) 29,720,844 4,880,923191

CITY OF LAREDO, TEXASBRIDGE SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 47,146,776Payments to suppliers (3,312,544)Payments to employees (7,358,465)Payments for interfund services used (22,311,962)Net cash provided by operating activities 14,163,805CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Transfer to other funds (4,468,108)Subsidy from federal and state grants 25,139Net cash provided (used) by noncapitaland related financing activities (4,442,969)CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Acquisition and construction of capital assets (3,433,693)Principal paid on capital debt (5,087,435)Interest paid on capital debt (3,698,470)Proceeds from sales of capital assets 2,608Net cash provided (used) by capitaland related financing activities (12,216,990)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investments 2,402,443Interest and dividends received 82,311Net cash provided (used) by investing activities 2,484,754Net increase (decrease) in cash and cash equivalents (11,400)Cash and cash equivalents, October 1 21,400Cash and cash equivalents, September 30 $ 10,000(Continued)192

CITY OF LAREDO, TEXASBRIDGE SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011(Continued)Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ 8,818,928Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 4,192,722(Increase) decrease in accounts receivable 628,474Increase (decrease) in allowance for uncollectible accounts (373)Increase in customer deposits (36,435)Increase (decrease) in accounts payable 344,741Increase (decrease) in deferred revenues 122,640Increase (decrease) in compensated absences payable 50,224Increase (decrease) in accrued wages and employee benefits 42,884Total adjustments 5,344,877Net cash provided by operating activities $ 14,163,805Noncash investing, capital, and financingactivities:Bond issuance cost amortized 137,365193

CITY OF LAREDO, TEXASMUNICIPAL HOUSING CORPORATIONSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)OPERATING REVENUES:Rental of Facilities $ 1,229,623 1,229,623 1,256,422 - 1,256,422 26,799Charges for Services 100,000 100,000 123,084 - 123,084 23,084Miscellaneous 24,661 24,661 33,468 - 33,468 8,807TOTAL OPERATING REVENUES 1,354,284 1,354,284 1,412,974 - 1,412,974 58,690OPERATING EXPENSES:Airport Housing:Personnel Services 469,674 459,674 414,043 2,860 416,903 42,771Materials and Supplies 165,166 127,166 104,342 - 104,342 22,824Contractual Services 435,114 459,842 435,200 - 435,200 24,642Other 76,157 53,876 61,929 (31,430) 30,499 23,377Capital Outlay - 40,000 - 37,138 37,138 2,862Total Airport Housing 1,146,111 1,140,558 1,015,514 8,568 1,024,082 116,476West Laredo Housing:Personnel Services 97,491 98,716 99,744 (2,626) 97,118 1,598Materials and Supplies 44,941 44,941 30,606 - 30,606 14,335Contractual Services 165,813 170,141 159,803 - 159,803 10,338Other 12,600 12,600 12,600 - 12,600 -Total West Laredo Housing 320,845 326,398 302,753 (2,626) 300,127 26,271Total Operating Expenses BeforeDepreciation 1,466,956 1,466,956 1,318,267 5,942 1,324,209 142,747Depreciation Expense - - 109,308 (109,308) - -TOTAL OPERATING EXPENSES 1,466,956 1,466,956 1,427,575 (103,366) 1,324,209 142,747Operating Income (Loss) (112,672) (112,672) (14,601) 103,366 88,765 201,437NONOPERATING REVENUES (EXPENSES):Investment Income:Interest Earnings 7,200 7,200 7,335 - 7,335 135TOTAL NONOPERATING REVENUES(EXPENSES) 7,200 7,200 7,335 - 7,335 135Change in Net Assets (105,472) (105,472) (7,266) 103,366 96,100 201,572Total Net Assets-Beginning 2,278,445 2,278,445 2,278,445 - 2,278,445 -Total Net Assets-Ending $ 2,172,973 2,172,973 2,271,179 103,366 2,374,545 201,572194

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CITY OF LAREDO, TEXASMUNICIPAL HOUSING CORPORATIONSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 1,448,137Payments to suppliers (348,076)Payments to employees (512,396)Payments for interfund services used (456,625)Net cash provided by operating activities 131,040CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Purchases of capital assets (37,138)Net cash provided (used) by capitaland related financing activities (37,138)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investments (102,537)Interest and dividends received 8,635Net cash provided (used) by investing activities (93,902)Net increase (decrease) in cash and cash equivalents -Cash and cash equivalents, October 1 200Cash and cash equivalents, September 30 $ 200(Continued)196

CITY OF LAREDO, TEXASMUNICIPAL HOUSING CORPORATIONSTATEMENT OF CASH FLOWSYear ended September 30, 2011(Continued)Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ (14,601)Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 109,308(Increase) decrease in accounts receivable (212)Increase in allowance for uncollectible accounts 31,430Increase (decrease) in customer deposits 652Increase (decrease) in accounts payable (221)Increase (decrease) in deferred revenues 3,293Increase (decrease) in compensated absences payable (234)Increase (decrease) in accrued wages and employee benefits 1,625Total adjustments 145,641Net cash provided by operating activities $ 131,040197

CITY OF LAREDO, TEXASWATERWORKS SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)OPERATING REVENUES:Charges for Services $ 28,239,250 28,239,250 31,431,680 - 31,431,680 3,192,430Miscellaneous 3,479,197 3,479,197 3,625,787 - 3,625,787 146,590TOTAL OPERATING REVENUES 31,718,447 31,718,447 35,057,467 - 35,057,467 3,339,020OPERATING EXPENSES:General and Administrative:Personnel Services 1,036,028 1,036,027 980,770 (18,512) 962,258 73,769Materials and Supplies 77,734 60,234 32,263 - 32,263 27,971Contractual Services 1,818,311 1,835,812 1,751,764 - 1,751,764 84,048Other 71,230 71,230 85,621 (71,831) 13,790 57,440Total General and Administrative 3,003,303 3,003,303 2,850,418 (90,343) 2,760,075 243,228Utility Engineering:Personnel Services 1,056,844 1,056,844 754,224 (13,803) 740,421 316,423Materials and Supplies 45,710 67,883 45,792 - 45,792 22,091Contractual Services 87,462 89,694 76,211 - 76,211 13,483Other - 400 400 - 400 -Capital Outlay 209,976 185,171 - 144,212 144,212 40,959Total Utility Engineering 1,399,992 1,399,992 876,627 130,409 1,007,036 392,956Utility Billing:Personnel Services 1,873,519 1,873,519 1,841,716 954 1,842,670 30,849Materials and Supplies 927,766 839,117 568,409 - 568,409 270,708Contractual Services 730,395 801,287 620,649 - 620,649 180,638Capital Outlay 65,190 82,947 - 79,023 79,023 3,924Total Utility Billing 3,596,870 3,596,870 3,030,774 79,977 3,110,751 486,119Asset Management:Personnel Services 257,971 257,971 252,144 (1,065) 251,079 6,892Materials and Supplies 7,248 6,648 4,400 - 4,400 2,248Contractual Services 28,556 29,156 21,373 - 21,373 7,783Total Asset Management 293,775 293,775 277,917 (1,065) 276,852 16,923Water Treatment:Personnel Services 1,712,626 1,807,195 1,805,672 (10,922) 1,794,750 12,445Materials and Supplies 1,526,978 1,504,204 1,174,224 - 1,174,224 329,980Contractual Services 4,662,583 4,579,812 4,093,413 - 4,093,413 486,399Capital Outlay 99,000 86,000 - 85,944 85,944 56Total Water Treatment 8,001,187 7,977,211 7,073,309 75,022 7,148,331 828,880Transmission and Distribution:Personnel Services 1,807,971 1,807,971 1,294,622 (10,345) 1,284,277 523,694Materials and Supplies 931,250 933,058 786,529 - 786,529 146,529Contractual Services 1,001,459 1,005,716 584,299 - 584,299 421,417Other - - 34,782 - 34,782 (34,782)Capital Outlay 35,000 28,935 - - - 28,935Total Transmission and Distribution $ 3,775,680 3,775,680 2,700,232 (10,345) 2,689,887 1,085,793(Continued)198

CITY OF LAREDO, TEXASWATERWORKS SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011(Continued)Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)Water Pollution Control:Personnel Services $ 340,187 376,433 370,390 3,149 373,539 2,894Materials and Supplies 42,597 43,153 21,831 - 21,831 21,322Contractual Services 64,736 51,910 35,609 - 35,609 16,301Capital Outlay 14,500 14,500 - 14,919 14,919 (419)Total Water Pollution Control 462,020 485,996 427,830 18,068 445,898 40,098Total Operating Expenses BeforeDepreciation 20,532,827 20,532,827 17,237,107 201,723 17,438,830 3,093,997Depreciation Expense - - 7,260,095 (7,260,095) - -TOTAL OPERATING EXPENSES 20,532,827 20,532,827 24,497,202 (7,058,372) 17,438,830 3,093,997Operating Income (Loss) 11,185,620 11,185,620 10,560,265 7,058,372 17,618,637 6,433,017NONOPERATING REVENUES (EXPENSES):Investment Income:Interest Earnings 100,000 100,000 79,399 - 79,399 (20,601)Interest Earnings Restricted 163,060 798,078 800,957 - 800,957 2,879Discount Earnings - - 4,205 - 4,205 4,205Interest Rebate 872,014 872,014 872,014 - 872,014 -Premiums - 4,550,647 4,550,647 - 4,550,647 -Miscellaneous - 225,556 366,374 - 366,374 140,818Gain on Sale of Assets - - 29,293 33,306 62,599 62,599Bond Issues - 73,633,405 - 73,633,405 73,633,405 -Intergovernmental Revenue - 11,081 - - - (11,081)Interest Expense (5,774,215) (6,856,145) (8,737,268) 267,096 (8,470,172) (1,614,027)Principal Paid Revenue Bond /Capital Leases (5,157,513) (9,505,479) - (9,544,541) (9,544,541) (39,062)Fiscal Agent Fees (5,000) (5,000) (3,425) - (3,425) 1,575Bond Issuance Cost Amortized - (52,251) (93,927) 41,676 (52,251) -Loss on Advance Funding - (246,857) (18,271) (228,586) (246,857) -Water Availability (1,504,719) (1,504,719) (343,824) - (343,824) 1,160,895Other Non-Operating Expenses (1,635,423) (171,658,731) (9,139,482) (38,501,299) (47,640,781) 124,017,950TOTAL NONOPERATING REVENUES(EXPENSES) (12,941,796) (109,638,401) (11,633,308) 25,701,057 14,067,749 123,706,150Income (Loss) Before Contributionsand Transfers (1,756,176) (98,452,781) (1,073,043) 32,759,429 31,686,386 130,139,167Capital Contributions:Intergovernmental Revenue - 37,854,641 26,942,569 - 26,942,569 (10,912,072)Contributions - Waterrights 1,000,000 1,000,000 1,035,367 - 1,035,367 35,367Contributions - Developers - - 1,145,598 (1,145,598) - -Contributions - Other - - 144,210 (144,210) - -Transfer In:Waterworks System 11,413,703 19,392,934 - 19,305,056 19,305,056 (87,878)Transfers Out:Debt Service Fund - (1,375,144) (1,375,144) - (1,375,144) -Water Construction Fund (1,286,000) (6,670,646) - (436,964) (436,964) 6,233,682Water Debt Service (10,127,703) (9,743,057) - (18,868,092) (18,868,092) (9,125,035)Change in Net Assets (756,176) (57,994,053) 26,819,557 31,469,621 58,289,178 116,283,231Total Net Assets-Beginning 133,831,867 133,831,867 133,831,867 - 133,831,867 -Total Net Assets-Ending $ 133,075,691 75,837,814 160,651,424 31,469,621 192,121,045 116,283,231199

CITY OF LAREDO, TEXASWATERWORKS SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 33,369,541Receipts from interfund services provided 531,540Payments to suppliers (8,735,599)Payments to employees (7,155,952)Payments for interfund services used (2,177,852)Net cash provided by operating activities 15,831,678CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Transfer to other funds (1,758,247)Subsidiary from federal and state grants 21,214Net cash provided (used) by noncapitaland related financing activities (1,737,033)CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Proceeds from capital debt 77,884,944Capital contributions 1,035,367Subsidy from federal and state grants 30,078,510Purchases of capital assets (47,942,329)Principal paid on capital debt (9,544,541)Interest paid on capital debt (8,473,597)Proceeds from sales of capital assets 62,599Net cash provided (used) by capitaland related financing activities 43,100,953CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investments (58,822,903)Interest and dividends received 1,614,437Issuance of Notes Receivable 12,668Net cash provided (used) by investing activities (57,195,798)Net increase (decrease) in cash and cash equivalents (200)Cash and cash equivalents, October 1 2,150Cash and cash equivalents, September 30 $ 1,950(Continued)200

CITY OF LAREDO, TEXASWATERWORKS SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011(Continued)Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ 10,560,265Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 7,260,095(Increase) decrease in accounts receivable (1,150,329)Increase (decrease) in allowance for uncollectible accounts 64,324(Increase) decrease in inventories (213,309)Increase (decrease) in customer deposits 208,170Increase (decrease) in accounts payable (762,573)Increase (decrease) in deferred revenues (278,551)Increase (decrease) in compensated absences payable 51,243Increase (decrease) in accrued wages and employee benefits 92,343Total adjustments 5,271,413Net cash provided by operating activities $ 15,831,678Noncash investing, capital, and financingactivities:Bond issuance cost amortized 41,676Contributions of capital assets from developers 1,145,598Contributions of capital assets from other 144,210Increase (Decrease) in Accrued Interest Payable 267,096Loss on Advance Refunds 228,586201

CITY OF LAREDO, TEXASSEWER SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)OPERATING REVENUES:Charges for Services $ 26,770,053 26,770,053 27,438,365 - 27,438,365 668,312Miscellaneous 50,000 50,000 100,640 - 100,640 50,640TOTAL OPERATING REVENUES 26,820,053 26,820,053 27,539,005 - 27,539,005 718,952OPERATING EXPENSES:Administrative:Contractual Services 4,179,768 4,179,768 4,169,535 - 4,169,535 10,233Other - - 91,225 (91,225) - -Total Administrative 4,179,768 4,179,768 4,260,760 (91,225) 4,169,535 10,233Wastewater Treatment:Personnel Services 1,879,859 1,952,671 1,950,588 (15,731) 1,934,857 17,814Materials and Supplies 847,626 847,626 644,933 - 644,933 202,693Contractual Services 3,353,879 3,304,779 2,756,455 - 2,756,455 548,324Capital Outlay 342,000 342,000 - 133,456 133,456 208,544Total Wastewater Treatment 6,423,364 6,447,076 5,351,976 117,725 5,469,701 977,375Wastewater Collection:Personnel Services 1,329,592 1,472,913 1,454,260 (10,087) 1,444,173 28,740Materials and Supplies 706,068 809,661 765,308 - 765,308 44,353Contractual Services 1,213,593 1,223,014 766,823 - 766,823 456,191Other - - 15,965 - 15,965 (15,965)Capital Outlay 1,200,000 933,602 - 713,494 713,494 220,108Total Wastewater Collection 4,449,253 4,439,190 3,002,356 703,407 3,705,763 733,427Total Operating Expenses BeforeDepreciation 15,052,385 15,066,034 12,615,092 729,907 13,344,999 1,721,035Depreciation Expense - - 6,095,297 (6,095,297) - -TOTAL OPERATING EXPENSES 15,052,385 15,066,034 18,710,389 (5,365,390) 13,344,999 1,721,035Operating Income (Loss) $ 11,767,668 11,754,019 8,828,616 5,365,390 14,194,006 2,439,987(Continued)202

CITY OF LAREDO, TEXASSEWER SYSTEMSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011(Continued)Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)NONOPERATING REVENUES (EXPENSES):Investment Income:Interest Earnings $ 70,800 70,800 64,847 - 64,847 (5,953)Interest Earnings Restricted 103,020 171,559 171,246 - 171,246 (313)Gain/Loss On Sale of Equipment - - 99,668 - 99,668 99,668Discount Earnings 4,000 4,000 8,983 - 8,983 4,983Bond Issues - 11,332,060 - 11,332,060 11,332,060 -Miscellaneous - - 162,762 - 162,762 162,762Intergovernmental Revenue - 20,378 6,354 - 6,354 (14,024)Premium - 701,569 701,569 - 701,569 -Interest Expense (2,592,484) (2,814,896) (3,083,142) 22,943 (3,060,199) (245,303)Principal Paid Revenue Bond /Capital Leases (4,738,500) (5,168,500) - (5,176,563) (5,176,563) (8,063)Fiscal Agent Fees (6,550) (6,550) (3,725) - (3,725) 2,825Bond Issuance Cost Amortized - (128,925) (65,587) (63,338) (128,925) -Loss on Advance Refunding - (19,523) - (19,523) (19,523) -Other Non Operating Expenses (1,017,784) (37,139,304) (2,402,968) (6,359,992) (8,762,960) 28,376,344TOTAL NONOPERATING REVENUES(EXPENSES) (8,177,498) (32,977,332) (4,339,993) (264,413) (4,604,406) 28,372,926Income (Loss) Before Contributionsand Transfers 3,590,170 (21,223,313) 4,488,623 5,100,977 9,589,600 30,812,913Capital Contributions:State Capital Grant - 6,628 - - - (6,628)Contributions - Others - - 290,602 (277,988) 12,614 12,614Contributions - Developers - - 963,727 (963,727) - -Transfers In:Sewer Operating Fund 8,079,858 8,546,817 - 8,352,375 8,352,375 (194,442)Transfers Outs:Sewer Operations (7,302,858) (7,769,817) - (7,769,811) (7,769,811) 6Sewer Construction Fund (777,000) (777,000) - (582,564) (582,564) 194,436Change in Net Assets 3,590,170 (21,216,685) 5,742,952 3,859,262 9,602,214 30,818,899Total Net Assets-Beginning 99,144,945 99,144,945 99,144,945 - 99,144,945 -Total Net Assets-Ending $ 102,735,115 77,928,260 104,887,897 3,859,262 108,747,159 30,818,899203

CITY OF LAREDO, TEXASSEWER SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 26,439,088Receipts from interfund services provided 493,573Payments to suppliers (9,383,788)Payments to employees (3,329,338)Payments for interfund services used (1,638,102)Net cash provided by operating activities 12,581,433CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Subsidy from federal and state grants 310,920Proceeds from capital debt 11,885,181Capital contribution 12,614Purchases of capital assets (9,447,148)Principal paid on capital debt (5,176,563)Interest paid on capital debt (3,063,924)Proceeds from sales of capital assets 99,668Net cash provided (used) by capitaland related financing activities (5,379,252)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investments (7,453,907)Interest and dividends received 248,071Issuance of Notes Receivable 3,655Net cash provided (used) by investing activities (7,202,181)Net increase (decrease) in cash and cash equivalents -Cash and cash equivalents, October 1 300Cash and cash equivalents, September 30 $ 300(Continued)204

CITY OF LAREDO, TEXASSEWER SYSTEMSTATEMENT OF CASH FLOWSYear ended September 30, 2011(Continued)Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ 8,828,616Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 6,095,297(Increase) decrease in accounts receivable (737,603)Increase (decrease) in allowance for uncollectible accounts 88,736(Increase) decrease in inventories 9,272Increase (decrease) in accounts payable (1,820,918)Increase (decrease) in deferred revenues 42,523Increase (decrease) in compensated absences payable 25,817Increase (decrease) in accrued wages and employee benefits 49,693Total adjustments 3,752,817Net cash provided by operating activities $ 12,581,433Noncash investing, capital, and financingactivities:Contributions of capital assets from developers & others 1,241,715Bond issuance cost amortized 63,338Increase (Decrease) in Accrued Interest Payable (22,943)205

CITY OF LAREDO, TEXASSOLID WASTE MANAGEMENT FUNDSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)OPERATING REVENUES:Charges for Services $ 15,586,797 15,586,797 16,588,836 - 16,588,836 1,002,039Miscellaneous 276,940 56,940 43,088 - 43,088 (13,852)TOTAL OPERATING REVENUES 15,863,737 15,643,737 16,631,924 - 16,631,924 988,187OPERATING EXPENSES:Administration:Personnel Services 264,344 264,344 303,142 (13,433) 289,709 (25,365)Materials and Supplies 23,310 24,110 12,442 - 12,442 11,668Contractual Services 68,343 79,435 58,292 - 58,292 21,143Capital Outlay 37,410 - - - - -Total Administration 393,407 367,889 373,876 (13,433) 360,443 7,446Branch Division:Personnel Services - - 32,075 (19,663) 12,412 (12,412)-Total Branch Division - - 32,075 (19,663) 12,412 (12,412)Recycling:Personnel Services 796,428 821,428 749,770 (6,976) 742,794 78,634Materials and Supplies 349,149 349,149 206,408 - 206,408 142,741Contractual Services 721,692 986,692 738,720 - 738,720 247,972-Total Recycling 1,867,269 2,157,269 1,694,898 (6,976) 1,687,922 469,347SanitationPersonnel Services 3,561,385 3,586,385 3,463,709 37,026 3,500,735 85,650Materials and Supplies 1,159,209 1,231,359 1,163,310 - 1,163,310 68,049Contractual Services 1,911,413 2,261,663 1,749,463 - 1,749,463 512,200Other 730,723 197,948 34,408 (34,408) - 197,948Capital Outlay 18,726 18,728 - 18,728 18,728 -Total Sanitation 7,381,456 7,296,083 6,410,890 21,346 6,432,236 863,847Landfill:Personnel Services 1,005,006 1,015,006 877,244 (6,612) 870,632 144,374Materials and Supplies 911,470 832,770 435,095 - 435,095 397,675Contractual Services 3,855,756 3,698,260 2,662,036 - 2,662,036 1,036,224Other 311,000 311,000 463,037 (462,989) 48 310,952Capital Outlay 8,500 15,200 - 6,700 6,700 8,500Total Landfill 6,091,732 5,872,236 4,437,412 (462,901) 3,974,511 1,897,725Total Operating Expenses BeforeDepreciation 15,733,864 15,693,477 12,949,151 (481,627) 12,467,524 3,225,953Depreciation Expense - - 2,196,316 (2,196,316) - -TOTAL OPERATING EXPENSES 15,733,864 15,693,477 15,145,467 (2,677,943) 12,467,524 3,225,953Operating Income (Loss) $ 129,873 (49,740) 1,486,457 2,677,943 4,164,400 4,214,140(Continued)206

CITY OF LAREDO, TEXASSOLID WASTE MANAGEMENT FUNDSCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETSYear ended September 30, 2011(Continued)Budgeted Amount Actual VarianceBudget PositiveOriginal Final Actual Adjustments Basis (Negative)NONOPERATING REVENUES (EXPENSES):Investment Income:Interest Earnings $ 22,000 22,000 17,767 - 17,767 (4,233)Interest Earnings-Restricted 120,062 134,958 67,713 - 67,713 (67,245)Premiums - 187,452 187,452 - 187,452 -Discount Earnings 2,600 2,600 6,513 - 6,513 3,913Miscellaneous - - 16,355 - 16,355 16,355Gain (Loss) From Sale of Assets - 220,000 14,600 - 14,600 (205,400)Bond Issues - 3,355,458 - 3,355,458 3,355,458 -Interest Expense (626,309) (626,309) (595,437) 12,909 (582,528) 43,781Gain (Loss) on Advance Refunding - - - (318,742) (318,742) (318,742)Principal Paid Revenue Bond (900,658) (4,062,694) - (4,098,080) (4,098,080) (35,386)Fiscal Agent Fees - (125) (125) - (125) -Bond Issuance Cost Amortized - (67,615) (37,745) (29,870) (67,615) -Other Non-Operating Expenses - (9,415) - - - 9,415Construction - (3,754,235) - (2,293,944) (2,293,944) 1,460,291TOTAL NONOPERATING REVENUES(EXPENSES) (1,382,305) (4,597,925) (322,907) (3,372,269) (3,695,176) 902,749Change in Net Assets (1,252,432) (4,647,665) 1,163,550 (694,326) 469,224 5,116,889Total Net Assets-Beginning 6,180,401 6,180,401 6,180,401 - 6,180,401 -Total Net Assets-Ending $ 4,927,969 1,532,736 7,343,951 (694,326) 6,649,625 5,116,889207

CITY OF LAREDO, TEXASSOLID WASTE MANAGEMENTSTATEMENT OF CASH FLOWSYear ended September 30, 2011CASH FLOW FROM OPERATING ACTIVITIES:Receipts from customers and users $ 16,734,410Receipts from interfund services provided 177,180Payments to suppliers (8,140,254)Payments to employees (1,330,326)Payments for interfund services used (4,053,687)Net cash provided by operating activities 3,387,323CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:Transfer to other funds 1,839,678Transfer from other funds 321,416Net cash provided (used) by noncapitaland related financing activities 2,161,094CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Proceeds from Capital Debt 3,156,553Subsidy from federal and state grants 14,206Purchases of capital assets (2,303,017)Principal paid on capital debt (4,098,080)Interest paid on capital debt (582,653)Proceeds from sales of capital assets 14,600Net cash provided (used) by capitaland related financing activities (3,798,391)CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sales and maturities of investments (1,843,302)Interest and dividends received 93,426Net cash provided (used) by investing activities (1,749,876)Net increase (decrease) in cash and cash equivalents 150Cash and cash equivalents, October 1 1,750Cash and cash equivalents, September 30 $ 1,900(Continued)208

CITY OF LAREDO, TEXASSOLID WASTE MANAGEMENTSTATEMENT OF CASH FLOWSYear ended September 30, 2011(Continued)Reconciliation of operating income tonet cash provided (used) by operatingactivities:Operating income $ 1,486,457Adjustments to reconcile operatingincome to net cash provided (used)by operating activities:Depreciation expense 2,196,316(Increase) decrease in landfill closure and post closure costs 462,989(Increase) decrease in accounts receivable 258,538Increase (decrease) in allowance for uncollectible accounts 22,381(Increase) decrease in inventories (865)Increase (decrease) in accounts payable (1,079,167)Increase (decrease) in deferred revenues (1,253)Increase (decrease) in compensated absences payable 9,659Increase (decrease) in accrued wages and employee benefits 32,268Total adjustments 1,900,866Net cash provided by operating activities $ 3,387,323Noncash investing, capital, and financingactivities:Current closure and post closure costs 462,989Bond issuance cost amortized 29,870Accrued Interest Payable 12,909209

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FIDUCIARY FUNDS

FIDUCIARY FUNDSFiduciary funds account for assets held by the City in a trustee capacity or as an agent forother agencies or individuals, private organizations or governmental units, and/or otherfunds. Fiduciary funds include pension trust funds and agency funds.Agency Funds include:POLICE RETIREES DEPENDENTS – to account for contributions made by citypolice officers and the City for expenses associated with health benefits premiumsfor retired police officers’ dependants.FIRE RETIREE DEPENDENTS – to account for contributions made by city firefighters and the City for expenses associated with health benefits premiums forretired fire fighters’ dependants.PAYROLL CLEARING - to account for cash transfers received from other City fundsand the disbursement of net wages and payroll related fringe benefits andpayables.Pension Trust Funds include:CITY ANNUITY – to account for contributions made by the city departments to pay forCity retirees’ health insurance and death benefits.211

CITY OF LAREDO, TEXASSTATEMENT OF NET ASSETSFIDUCIARY FUNDSSEPTEMBER 30, 2011AGENCY FUNDSPENSION TRUSTFUNDPOLICEFIRERETIREE RETIREE PAYROLL TOTAL CITYDEPENDENTS DEPENDENTS CLEARING AGENCY ANNUITYFUND FUND FUND FUNDS FUNDASSETSAccrued Interest Receivable $ 140 - 1,893 2,033 -Investments, at Fair Market Value 129,195 - 1,752,513 1,881,708 -Accounts Receivable - 18,280 2,694 20,974 -TOTAL ASSETS 129,335 18,280 1,757,100 1,904,715 -LIABILITIESAccounts Payable 11 - 1,747,229 1,747,240 -Accrued Wages and Employee Benefits - - 9,871 9,871 -Deferred Revenues 129,324 - - 129,324 -Due To Other Funds - 18,280 - 18,280 -TOTAL LIABILITIES 129,335 18,280 1,757,100 1,904,715 -NET ASSETSHeld In Trust for Pension Benefits, Plan Participants,and Other Purposes $ - - - - -212

CITY OF LAREDO, TEXASSTATEMENT OF CHANGES IN NET ASSETSFIDUCIARY FUNDSFOR THE YEAR ENDED SEPTEMBER 30, 2011AGENCY FUNDSPENSION TRUSTFUNDPOLICEFIRERETIREES RETIREES PAYROLL TOTAL CITYDEPENDENTS DEPENDENTS CLEARING AGENCY ANNUITYFUND FUND FUND FUNDS FUNDADDITIONS:Contributions:Employer contributions $ 291,429 68,900 - 360,329 831,928Plan members 45,823 12,700 - 58,523 129,615Other contributions - 18,280 - 18,280 30,427Total Contributions 337,252 99,880 - 437,132 991,970Investment Earnings:Interest earnings and dividends 675 - - 675 -Total investment earnings 675 - - 675 -TOTAL ADDITIONS 337,927 99,880 - 437,807 991,970DEDUCTIONS:Benefits - - - - 920,426Administrative expenses 337,927 99,880 - 437,807 71,544TOTAL DEDUCTIONS 337,927 99,880 - 437,807 991,970Change in Net Assets - - - - -Net Assets - Beginning - - - - -NET ASSETS - ENDING $ - - - - -213

CITY OF LAREDO, TEXASCOMBINING STATEMENT OF CHANGES INASSETS AND LIABILITIESAGENCY FUNDSYear Ended September 30, 2011POLICE RETIREES DEPENDENTS FUNDBalanceBalanceBeginningEndof Year Additions Deductions of YearASSETSCash and Cash EquivalentsCash $ - 467,905 467,905 -Accrued Interest Receivable 288 140 288 140Investments, at Fair Market Value 146,477 129,195 146,477 129,195TOTAL ASSETS 146,765 597,240 614,670 129,335LIABILITIESAccounts Payable 12 58 59 11Deferred Revenue 146,753 - 17,429 129,324TOTAL LIABILITIES $ 146,765 58 17,488 129,335FIRE RETIREES DEPENDENTS FUNDBalanceBalanceBeginningEndof Year Additions Deductions of YearASSETSCash and Cash EquivalentsCash $ - 99,880 99,880 -Accounts Receivable - 18,280 - 18,280TOTAL ASSETS - 118,160 99,880 18,280LIABILITIESDue to other Funds - 18,280 - 18,280TOTAL LIABILITIES $ - 18,280 - 18,280(Continued)214

CITY OF LAREDO, TEXASCOMBINING STATEMENT OF CHANGES INASSETS AND LIABILITIESAGENCY FUNDSYear Ended September 30, 2011(Continued)PAYROLL CLEARING FUNDBalanceBalanceBeginningEndof Year Additions Deductions of YearASSETSCash and Cash EquivalentsCash $ - 92,596,890 92,596,890 -Accrued Interest Receivable 3,120 1,893 3,120 1,893Investments, at Fair Market Value 1,587,703 1,756,343 1,591,533 1,752,513Accounts Receivable 2,615 85 6 2,694TOTAL ASSETS 1,593,438 94,355,211 94,191,549 1,757,100LIABILITIESAccounts Payable 1,575,662 73,599,776 73,428,209 1,747,229Accrued Wages and Benefits 17,776 45,687,228 45,695,133 9,871TOTAL LIABILITIES $ 1,593,438 119,287,004 119,123,342 1,757,100TOTALS-ALL AGENCY FUNDSBalanceBalanceBeginningEndof Year Additions Deductions of YearASSETSCash and Cash Equivalents:Cash $ - 93,164,675 93,164,675 -Accrued Interest Receivable 3,408 2,033 3,408 2,033Accounts Receivable 2,615 18,365 6 20,974Investments, at Fair Market Value 1,734,180 1,885,538 1,738,010 1,881,708TOTAL ASSETS 1,740,203 95,070,611 94,906,099 1,904,715LIABILITIESAccounts Payable 1,575,674 73,599,834 73,428,268 1,747,240Accrued Wages and Benefits 17,776 45,687,228 45,695,133 9,871Due to other Funds - 18,280 - 18,280Deffered Revenue 146,753 - 17,429 129,324TOTAL LIABILITIES $ 1,740,203 119,305,342 119,140,830 1,904,715215

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STATISTICAL SECTION

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Governmental ActivitiesInvested in capital assets, net of related debt $ 102,334,257 $ 188,872,775 $ 187,385,351 $ 198,694,918 $ 215,439,510 $ 241,151,427 $ 226,128,108 $ 327,113,377 $ 371,030,290 $ 404,332,329Restricted 25,676,105 29,412,088 20,473,785 34,889,245 42,590,216 13,422,271 18,974,742 21,193,295 23,051,240 24,098,965Unrestricted 39,205,713 44,505,877 37,683,170 42,979,049 44,842,955 81,277,357 72,424,497 71,981,867 36,509,233 26,981,198Total governmental activities net assets $ 167,216,075 262,790,740 245,542,306 276,563,212 302,872,681 335,851,055 317,527,347 420,288,539 430,590,763 455,412,492Business-type activitiesInvested in capital assets, net of related debt $ 213,370,881 $ 214,214,786 $ 225,414,099 $ 234,602,168 $ 228,622,897 $ 182,101,727 $ 289,915,339 $ 241,824,056 $ 251,995,464 $ 273,496,354Restricted 9,070,370 7,954,794 8,618,508 11,147,151 10,970,742 11,615,850 24,336,104 17,621,503 16,695,175 25,879,932Unrestricted 37,610,331 40,368,093 44,261,791 33,987,911 53,992,988 112,203,891 40,616,292 38,022,700 36,287,912 44,344,017Total business-type activities net assets $ 260,051,582 262,537,673 278,294,398 279,737,230 293,586,627 305,921,468 354,867,735 297,468,259 304,978,551 343,720,303NET ASSETS BY COMPONENTLAST TEN FISCAL PERIODS (1)(ACCRUAL BASIS OF ACCOUNTING)CITY OF LAREDO, TEXASTABLE 1Fiscal Year217Primary governmentInvested in capital assets, net of related debt $ 315,705,138 $ 403,087,561 $ 412,799,450 $ 433,297,086 $ 444,062,407 $ 423,253,154 $ 516,043,447 $ 568,937,433 $ 623,025,754 $ 677,828,683Restricted 34,746,475 37,366,882 29,092,293 46,036,396 53,560,958 25,038,121 43,310,846 38,814,798 39,746,415 49,978,897Unrestricted 76,816,044 84,873,970 81,944,961 76,966,960 98,835,943 193,481,248 113,040,789 110,004,567 72,797,145 71,325,215Total primary government net assets $ 427,267,657 $ 525,328,413 $ 523,836,704 $ 556,300,442 $ 596,459,308 $ 641,772,523 $ 672,395,082 $ 717,756,798 $ 735,569,314 $ 799,132,795NOTES:(1) City of Laredo first applied GASB Statement No. 34 in fiscal year 2002; therefore, government-wide financial information for years prior to fiscal year 2002 is not available.SOURCE:City of Laredo, Texas

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011ExpensesGovernmental Activities:General Government $ 15,557,179 $ 16,693,444 $ 32,457,409 $ 16,356,901 $ 17,637,852 $ 18,314,193 $ 19,219,026 $ 20,403,447 $ 33,057,032 $ 33,212,469Public Safety 58,387,980 61,576,788 73,213,859 76,682,946 81,993,355 86,550,055 95,322,249 101,317,492 96,731,529 108,220,849Public Works 36,409,755 7,018,369 18,914,550 27,601,104 22,544,287 22,524,297 26,609,686 33,983,968 31,945,598 28,971,676Health and Welfare 14,783,388 15,095,426 16,146,114 16,076,928 15,734,517 17,053,474 18,974,496 19,374,716 21,408,808 21,559,624Culture and Recreation 12,244,217 12,631,869 14,283,487 19,304,006 14,770,220 14,838,677 16,311,284 19,137,914 21,989,636 24,351,217Air Transportation 5,135,446 4,399,578 7,476,744 6,827,442 6,487,313 7,157,616 5,709,233 6,014,102 5,592,799 8,337,337Interest on Long Term Debt 10,116,381 10,021,002 9,583,425 12,003,612 9,337,731 9,809,368 60,052,703 29,610,058 11,170,771 11,330,317Total Governmental Activities Expenses 152,634,346 127,436,476 172,075,588 174,852,939 168,505,275 176,247,680 242,198,677 229,841,697 221,896,173 235,983,489Business-Type ActivitiesBridge System 30,677,776 32,848,606 33,328,290 34,643,592 38,315,376 38,421,137 42,734,185 39,335,750 40,917,048 41,558,090Solid Waste Management System 9,402,560 11,215,440 12,620,242 14,685,053 13,559,190 15,000,574 - 18,828,910 14,516,888 15,794,014Water System 15,645,483 14,878,004 15,729,159 16,888,416 20,607,390 22,213,666 28,212,391 28,536,428 40,110,255 42,840,185Sewer System 10,158,939 11,285,160 10,840,161 10,903,372 12,733,207 14,251,997 16,765,662 18,235,772 25,526,830 24,269,283Other Business-Type Activities 12,699,704 13,157,048 14,304,763 15,428,595 15,077,621 15,744,459 33,051,340 15,734,541 17,278,725 16,439,140Total Business-Type Activities Expenses 78,584,462 83,384,258 86,822,615 92,549,028 100,292,784 105,631,833 120,763,578 120,671,401 138,349,746 140,900,712Total Primary Government Expenses $ 231,218,808 $ 210,820,734 $ 258,898,203 $ 267,401,967 $ 268,798,059 $ 281,879,513 $ 362,962,255 $ 350,513,098 $ 360,245,919 $ 376,884,201(Continued)CHANGES IN NET ASSETSLAST TEN FISCAL PERIODS (10)(ACCRUAL BASIS OF ACCOUNTING)CITY OF LAREDO, TEXASTABLE 2Fiscal Year218Program RevenuesGovernmental Activities:Charges for ServicesGeneral Government $ 26,402,564 $ 27,747,717 $ 29,034,241 $ 30,349,336 $ 34,295,011 $ 32,910,354 $ 37,689,581 $ 33,923,642 $ 36,183,314 $ 40,374,802Public Safety 5,625,697 5,121,972 7,207,564 5,786,216 6,638,370 8,172,180 5,778,145 10,016,804 12,060,974 8,589,950Public Works 1,677,516 3,030,954 1,011,853 1,429,722 2,535,760 5,465,043 5,397,891 3,675,472 4,528,772 2,158,284Health and Welfare 5,875,532 5,977,562 5,029,827 9,739,625 8,564,712 9,392,593 12,351,506 10,452,002 9,832,614 11,998,683Culture and Recreation 965,379 1,341,474 1,445,751 1,245,478 1,784,371 1,775,372 1,570,822 4,029,673 5,157,950 5,412,318Air Transportation 3,530,883 4,261,466 3,741,185 3,851,003 4,066,353 4,838,526 4,828,695 4,624,053 5,516,704 4,586,437Operating Grants and Contributions 9,960,418 13,576,179 13,072,709 14,751,179 11,946,958 12,987,606 13,930,222 18,369,080 21,833,031 23,499,860Capital Grants and Contributions 7,013,550 29,903,003 13,094,915 14,271,496 16,859,762 18,236,216 15,342,851 30,660,626 48,006,390 36,020,500Total Governmental Activities Program Revenues 61,051,539 90,960,327 73,638,045 81,424,055 86,691,297 93,777,890 96,889,713 115,751,352 143,119,749 132,640,834Business-Type Activities:Charges for ServicesBridge System 34,408,912 34,836,756 35,574,197 39,308,141 42,757,164 41,642,985 48,757,093 43,736,439 45,913,716 46,433,396Solid Waste Management System 13,009,371 13,894,945 14,531,305 15,000,859 15,802,217 16,645,845 - 15,570,572 16,014,354 16,657,612Water System 16,773,484 15,429,092 15,902,648 18,736,507 25,215,914 28,217,432 28,832,337 30,032,089 29,859,060 36,301,316Sewer System 13,158,360 12,969,437 13,296,851 14,409,247 15,606,262 15,157,406 15,820,522 21,401,432 22,884,626 27,711,393Other Business-Type Activities 4,461,353 4,031,725 4,414,719 4,768,926 5,382,835 5,760,012 22,222,109 5,393,258 5,447,624 5,384,915Operating Grants and Contributions 12,153,814 13,296,318 12,514,706 7,244,365 4,564,435 4,732,614 4,519,591 4,433,244 5,439,854 4,279,722Capital Grants and Contributions 1,710,991 1,344,286 13,011,433 7,463,200 13,062,195 9,447,512 57,024,886 41,035,105 26,282,072 36,609,025Total Business-Type Activities Program Revenues 95,676,285 95,802,559 109,245,859 106,931,245 122,391,022 121,603,806 177,176,538 161,602,139 151,841,306 173,377,379Total Primary Government Program Revenues $ 156,727,824 $ 186,762,886 $ 182,883,904 $ 188,355,300 $ 209,082,319 $ 215,381,696 $ 274,066,251 $ 277,353,491 $ 294,961,055 $ 306,018,213

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Net (Expense)/RevenueGovernmental Activities $ (91,582,807) $ (36,476,149) $ (98,437,543) $ (93,428,884) $ (81,813,978) $ (82,469,790) $ (145,308,964) $ (114,090,345) $ (78,776,424) $ (103,342,655)Business-Type Activities 17,091,823 12,418,301 22,423,244 14,382,217 22,098,238 15,971,973 56,412,960 40,930,738 13,491,560 32,476,667Total Primary Government Net Expense $ (74,490,984) $ (24,057,848) $ (76,014,299) $ (79,046,667) $ (59,715,740) $ (66,497,817) $ (88,896,004) $ (73,159,607) $ (65,284,864) $ (70,865,988)Change in Net AssetsGovernmental Activities $ (16,311,252) $ 55,447,359 $ (1,997,799) $ 16,136,365 $ 31,797,868 $ 33,071,710 $ (16,243,928) $ 6,265,537 $ 35,671,821 $ 24,821,729Business-Type Activities 14,167,868 2,486,091 15,756,725 1,442,832 12,548,257 12,334,841 49,306,822 39,096,179 14,075,292 38,741,752Total Primary Government $ (2,143,384) $ 57,933,450 $ 13,758,926 $ 17,579,197 $ 44,346,125 $ 45,406,551 $ 33,062,894 $ 45,361,716 $ 49,747,113 $ 63,563,481CHANGES IN NET ASSETSLAST TEN FISCAL PERIODS (10)(ACCRUAL BASIS OF ACCOUNTING)CITY OF LAREDO, TEXASTABLE 2(Continued)Fiscal Year219General Revenues and Other Changes inNet AssetsGovernmental Activities:TaxesProperty Taxes $ 30,707,246 $ 36,551,380 $ 41,518,421 $ 45,019,642 $ 49,472,071 $ 55,844,667 $ 62,332,204 $ 68,693,562 $ 69,155,582 $ 69,142,902Sales Tax 21,384,306 22,807,995 24,553,316 26,628,764 30,151,183 31,476,528 32,648,289 29,801,861 29,790,610 39,050,113Franchise Taxes 6,562,834 5,580,351 5,726,701 6,197,623 6,595,084 6,528,053 6,835,933 6,714,232 6,681,712 7,018,602Hotel Motel Tax 2,643,862 2,965,282 2,849,026 2,718,679 3,054,454 3,392,027 3,331,021 2,718,253 3,087,561 4,117,956Alcoholic Beverage Taxes 216,212 233,288 266,345 279,198 318,415 341,440 334,273 323,349 308,966 329,521Grants and Contributions Not Restricted to Specific Programs 4,546,517 4,602,769 5,027,736 4,497,007 5,235,856 4,095,598 4,845,731 - - -Investment Earnings 1,874,481 1,147,142 800,882 5,489,823 3,324,727 3,866,276 3,478,262 1,980,307 703,433 505,944Gain on Sale of Capital Assets 63,430 3,340,946 4,444,005 755,759 54,052 344,958 409,102 122,890 36,680 1,327,296Bond Premium - - - - - - 1,227,777 1,893,419 - 829,086Transfers 7,272,667 14,694,355 11,253,312 17,978,754 15,406,004 9,651,953 13,622,444 8,108,009 4,683,701 5,842,964Total Governmental Activities 75,271,555 91,923,508 96,439,744 109,565,249 113,611,846 115,541,500 129,065,036 120,355,882 114,448,245 128,164,384Business-Type Activities:Sales Tax 4,092,648 4,331,368 4,690,014 5,026,869 5,658,730 5,881,063 6,122,978 5,760,681 5,512,908 6,311,745Investment Earnings - - - - 53,537 - - - 288,222 203,743Gain/(Loss) on Sale of Capital Assets 256,064 430,777 (103,221) 12,500 143,756 133,758 393,328 512,769 (533,697) 152,893Bond Premium - - - - - - - - - 5,439,668Transfers (7,272,667) (14,694,355) (11,253,312) (17,978,754) (15,406,004) (9,651,953) (13,622,444) (8,108,009) (4,683,701) (5,842,964)Total Business-Type Activities (2,923,955) (9,932,210) (6,666,519) (12,939,385) (9,549,981) (3,637,132) (7,106,138) (1,834,559) 583,732 6,265,085Total Primary Government $ 72,347,600 $ 81,991,298 $ 89,773,225 $ 96,625,864 $ 104,061,865 $ 111,904,368 $ 121,958,898 $ 118,521,323 $ 115,031,977 $ 134,429,469SOURCE:City of Laredo, Texas

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Taxes:Property $ 30,147,195 $ 35,876,444 $ 40,705,401 $ 45,239,189 $ 49,303,836 $ 55,681,122 $ 61,553,183 $ 67,284,934 $ 68,870,491 $ 68,998,291Sales 21,447,813 22,547,235 24,374,768 26,433,198 29,894,463 31,384,048 32,518,723 30,308,403 29,339,115 33,669,024Franchise Fees 6,542,640 5,539,242 5,700,834 6,173,160 6,569,349 6,506,014 6,793,268 6,788,837 6,668,731 6,995,838Bingo Tax 48,056 48,058 49,852 51,516 63,010 65,524 68,268 68,274 68,235 74,345Alcoholic Beverage 215,022 231,114 260,277 272,500 307,270 341,130 337,545 325,611 304,894 341,545Hotel Motel 2,672,236 2,692,876 3,298,899 2,959,077 3,024,062 3,330,740 3,327,146 2,775,027 3,077,683 4,055,510Licenses and Permits 5,423,246 5,436,837 5,843,628 6,084,439 6,603,719 6,736,908 6,029,355 6,370,472 6,496,534 6,487,718Intergovernmental 21,532,884 31,340,394 28,932,417 33,289,585 33,894,211 33,877,881 35,693,757 39,882,049 52,709,235 49,801,150Charges for Services 23,802,222 24,703,403 26,623,867 27,654,715 31,502,211 31,310,068 37,045,771 37,636,101 41,954,138 41,728,421Fines 2,083,427 2,303,065 2,726,372 2,930,319 2,901,019 3,147,555 3,646,728 3,392,829 3,734,101 3,762,977Fees and Collections 1,754,100 2,246,309 2,270,772 2,481,061 3,004,802 3,386,329 3,492,841 3,837,470 3,592,488 3,547,545Rents 4,401,311 5,116,014 4,922,493 5,068,865 5,679,488 6,314,430 6,545,628 5,714,968 6,482,548 5,731,032Interest and Other 2,920,369 1,324,605 876,024 6,103,161 4,528,522 8,370,527 7,238,944 4,843,786 1,933,321 1,511,880Miscellaneous 3,136,435 3,758,090 3,554,741 1,493,862 2,313,099 2,264,974 643,499 4,923,082 8,441,665 4,722,829Contributions & Donations 23,666 728,198 2,356,387 871,866 924,530 1,008,606 988,331 95,240 18,271,618 10,951,450Reimbursements 1,041,506 2,339,578 1,349,408 1,627,354 1,398,698 1,585,062 1,729,311 1,913,607 1,322,816 2,280,613TOTAL REVENUES 127,192,128 146,231,462 153,846,140 168,733,867 181,912,289 195,310,918 207,652,298 216,160,690 253,267,613 244,660,168TOTAL EXPENDITURES 183,459,807 177,707,134 188,026,176 184,891,173 201,627,935 210,990,640 234,598,750 291,572,439 283,017,944 286,323,852Excess (Deficiency) of Revenues Over(Under) Expenditures (56,267,679) (31,475,672) (34,180,036) (16,157,306) (19,715,646) (15,679,722) (26,946,452) (75,411,749) (29,750,331) (41,663,684)Transfers In 33,120,347 46,184,832 25,299,958 36,174,419 35,881,412 26,222,228 37,533,557 40,622,386 29,605,450 46,699,942Issuance of Debt - 15,928,240 - 75,154,978 35,185,000 76,160,000 79,855,000 56,980,000 8,715,629 23,189,078Bond Premium - - - - - - 1,227,777 1,860,783 - 829,086Payment to refunded bond escrow agent - (4,629,841) - (62,639,409) (18,796,378) - - - (9,230) (3,317,933)Transfers Out (25,329,302) (31,469,194) (14,023,498) (21,272,956) (20,405,531) (16,463,011) (23,493,174) (31,697,149) (24,521,749) (39,073,000)Contributions - - - - - - (46,471,173) 9,340,787 - -Capital Leases 12,897,850 - 14,307,219 - 1,600,000 4,349,665 (102,232) (102,232) 1,330,425 807,653Sale of Assets 204,349 3,542,655 4,546,896 754,683 52,673 334,354 194,959 121,669 33,461 1,375,078TOTAL OTHER FINANCINGSOURCES (USES) 20,893,244 29,556,692 30,130,575 28,171,715 33,517,176 90,603,236 48,744,714 77,126,244 15,153,986 30,509,904Net Change in Fund Balances $ (35,374,435) $ (1,918,980) $ (4,049,461) $ 12,014,409 $ 13,801,530 $ 74,923,514 $ 21,798,262 $ 1,714,495 $ (14,596,345) $ (11,153,780)Debt Service as a Percentage of non-capital expenditures 16.36% 15.51% 14.38% 15.50% 15.27% 14.83% 16.20% 26.45% 11.93% 10.88%CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDSLAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 3Fiscal YearREVENUES:220EXPENDITURES:General Government 14,804,490 15,751,235 15,541,101 16,021,417 17,112,707 17,413,287 17,894,512 18,892,213 18,688,270 19,098,129Public Safety 56,842,094 63,906,967 69,598,058 74,215,275 78,048,861 83,246,215 91,511,415 93,373,168 97,621,453 101,057,294Public Works 11,284,056 11,408,863 9,530,599 9,487,014 10,129,429 12,274,330 11,967,902 18,923,375 13,683,613 10,185,108Health and Welfare 14,195,664 15,303,051 15,683,517 15,802,606 15,377,413 16,703,368 18,507,725 18,734,227 20,447,413 20,160,803Cultural and Recreational 11,728,523 13,154,156 13,764,181 14,844,259 15,415,751 15,921,447 15,658,222 18,337,167 21,478,230 23,640,666Air Transportation Services 3,824,408 3,519,733 5,437,611 4,789,284 4,488,854 5,160,618 4,109,813 4,317,786 4,439,025 4,651,685Capital Outlay 48,746,914 27,793,519 22,788,736 24,933,816 35,722,670 34,033,486 44,092,402 56,947,674 82,767,916 85,712,034Contributions - 3,620,000 11,914,519 - - - - - - -Debt Service:Bond Costs - - - - - - 766,853 27,799,429 235,629 704,855Principal Retirement 11,925,613 13,475,623 14,374,770 15,677,894 16,693,119 16,986,948 17,398,209 18,626,220 12,945,169 10,246,364Interest and Fiscal Expenditures 10,108,045 9,773,987 9,393,084 9,119,608 8,639,131 9,250,941 12,691,697 15,621,180 10,711,226 10,866,914OTHER FINANCING SOURCES (USES):SOURCE:City of Laredo, Texas

CITY OF LAREDO, TEXAS2003 2004 2005 2006 2007 2008 2009 2010 2011*GENERAL FUNDNonspendable $ - - - - - - - - 14,937Restricted - - - - - - - - 786,681Commited - - - - - - - - 22,393,198Assigned - - - - - - - - 1,613,435Unassigned - - - - - - - - 10,712,189Reserved 868,913 1,216,553 1,461,135 1,663,551 1,376,988 1,297,655 1,516,661 2,122,655 -Unreserved 9,151,113 9,110,554 12,860,386 19,425,653 21,769,926 25,322,950 29,175,762 32,823,677 -Total General Fund $ 10,020,026 10,327,107 14,321,521 21,089,204 23,146,914 26,620,605 30,692,423 34,946,332 35,520,440FUND BALANCE, GOVERNMENTAL FUNDSLAST NINE YEARS (9)(Modified Accrual Basis of Accounting)TABLE 4Fiscal Year221ALL OTHER GOVERNMENTAL FUNDSNonspendable $ - - - - - - - - 119,161Restricted - - - - - - - - 104,259,849Commited - - - - - - - - 6,756,570Assigned - - - - - - - - 11,709,333Unassigned (Deficit) - - - - - - - - (125,741)Reserved 29,210,173 19,129,472 20,376,787 16,551,117 29,244,789 26,694,766 36,478,312 81,538,217 -Unreserved, reported in:Special Revenue Funds 15,041,595 8,196,925 447,743 6,866,441 7,725,320 12,831,254 25,473,486 27,153,981 -Debt Service Funds 5,537,538 4,592,744 5,634,547 6,508,489 5,946,381 9,293,964 6,636,000 - -Capital Project Funds 1,059,628 14,573,251 28,053,310 34,329,414 94,204,775 106,834,652 84,709,516 25,754,862 -Total all other governmental funds $ 50,848,934 46,492,392 54,512,387 64,255,461 137,121,265 155,654,636 153,297,314 134,447,060 122,719,172NOTES:(1) City of Laredo first applied GASB Statement No. 34 in fiscal year 2002; therefore, government-wide financial information for years prior to fiscal year 2002 is not available.* GASB Statement No. 54 was implemented in fiscal year 2011SOURCE:City of Laredo, Texas

GENERAL GOVERNMENT TAX REVENUES BY SOURCELAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 5FISCAL AD VALOREM SALES BEVERAGE BINGO OCCUPANCY FRANCHISEPERIODS TAXES (1) TAX TAX TAX TAX TAX TOTAL2002 $ 30,147,195 $ 21,447,813 $ 215,022 $ 48,056 $ 2,672,236 $ 6,542,640 $ 61,072,9622003 35,876,444 22,547,235 231,114 48,058 2,692,876 5,539,242 66,934,9692004 40,705,401 24,111,061 260,277 49,852 3,298,899 5,700,834 74,126,3242005 45,239,189 26,433,198 272,500 51,516 2,959,077 6,173,160 81,128,6402006 49,303,836 29,894,463 307,270 63,010 3,024,062 6,569,349 89,161,9902007 55,681,122 31,384,048 341,130 65,524 3,330,740 6,506,014 97,308,5782008 61,553,183 32,518,723 337,545 68,268 3,327,146 6,793,268 104,598,1332009 67,284,934 30,308,403 325,611 68,274 2,775,027 6,788,837 107,551,0862010 68,870,491 29,339,115 304,894 68,235 3,077,683 6,668,731 108,329,1492011 $ 68,998,291 $ 33,669,024 $ 341,545 $ 74,345 $ 4,055,510 $ 6,995,838 $ 114,134,553NOTES:(1) Includes General, Special Revenue, and Debt Service Fund tax revenues.SOURCE:City of Laredo, Texas222

PERCENT OFTABLE 6TOTAL CURRENT PERCENT OF COLLECTIONS IN PERCENT OF TOTAL OUTSTANDING DELINQUENT TAXESFISCAL TOTAL TAX ADJUSTED TAX CURRENT TAXES SUBSEQUENT TAX COLLECTIONS TO DELINQUENT TO ADJUSTEDPERIODS LEVY (1) ADJUSTMENTS LEVY COLLECTIONS COLLECTED YEARS ADJUSTED TAX LEVY TAXES TAX LEVY2002 $ 29,221,694 $ 355,226 $ 29,576,920 $ 28,028,927 95.92% $ 29,362,774 99.28% $ 214,068 0.72%2003 33,435,345 1,948,687 35,384,032 33,426,302 99.97% 35,142,758 99.32% 241,274 0.68%2004 38,455,159 941,645 39,396,804 37,461,655 97.42% 39,114,288 99.28% 282,517 0.72%2005 43,209,681 168,597 43,378,278 41,693,911 96.49% 43,139,092 99.45% 239,186 0.55%2006 47,451,046 275,847 47,726,893 45,951,954 96.84% 47,495,720 99.52% 231,173 0.48%2009 65,642,287 (222,293) 65,419,994 63,194,853 96.27% 64,927,173 99.25% 492,821 0.75%2010 66,926,927 (274,420) 66,652,507 64,379,305 96.19% 65,864,622 98.82% 787,885 1.18%2011 $ 67,184,974 $ (168,888) $ 67,016,086 $ 65,241,316 97.11% $ - - $ 1,774,769 2.65%PROPERTY TAX LEVIES AND COLLECTIONS CITY OF LAREDO, TEXASLAST TEN FISCAL PERIODS2232007 53,559,195 288,381 53,847,576 52,024,898 97.14% 53,564,203 99.47% 283,373 0.53%2008 59,584,704 105,632 59,690,336 57,843,306 97.08% 59,352,142 99.43% 338,193 0.57%NOTES:(1) Original levy as filed with the State Comptroller OfficeSOURCE:City of Laredo, Texas

2002 3,503,561,473 3,503,561,473 2,408,624,610 2,408,624,610 445,602,625 5,466,583,458 5,466,583,458 0.576360 100%2003 3,606,409,537 3,606,409,537 2,479,330,480 2,479,330,480 519,598,749 5,566,141,268 5,566,141,268 0.630530 100%2004 3,844,014,790 3,844,014,790 2,704,140,692 2,704,140,692 529,716,818 6,018,438,664 6,018,438,664 0.641760 100%2005 4,270,523,001 4,270,523,001 3,040,120,071 3,040,120,071 537,507,869 6,773,135,203 6,773,135,203 0.637000 100%2006 4,713,754,396 4,713,754,396 3,285,932,811 3,285,932,811 550,543,393 7,449,143,814 7,449,143,814 0.637000 100%2007 5,411,082,137 5,411,082,137 3,582,097,472 3,582,097,472 585,142,683 8,408,036,926 8,408,036,926 0.637000 100%2008 6,069,242,179 6,069,242,179 3,971,864,502 3,971,864,502 647,577,934 9,393,528,747 9,393,528,747 0.637000 100%2011 $ 6,938,223,832 $ 6,938,223,832 $ 4,460,292,962 $ 4,460,292,962 $ 761,010,658 $ 10,637,506,136 $ 10,637,506,136 0.637000 100%ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTYLAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 7-------RESIDENTIAL PROPERTY-------- -----------COMMERCIAL PROPERTY------------------------TOTALS--------------RATIO OF TOTALFISCAL ASSESSED ESTIMATED ACTUAL ASSESSED ESTIMATED ACTUAL EXEMPTIONS ASSESSED ESTIMATED ACTUAL TOTAL DIRECT ASSESSED VALUE TO TOTALPERIODS VALUE VALUE (1) VALUE VALUE (1) (2) VALUE VALUE (1) TAX RATE ESTIMATED ACTUAL VALUE2242009 6,654,553,665 6,654,553,665 4,402,760,384 4,402,760,384 671,339,004 10,385,975,045 10,385,975,045 0.637000 100%2010 6,825,803,972 6,825,803,972 4,571,159,052 4,571,159,052 773,831,223 10,623,131,801 10,623,131,810 0.637000 100%NOTES:(1) This estimated valuation is for tax purposes only.(2) Total exemptions include Homestead, Veteran, Agricultural exemptions. Homestead valuations increased in 1983 from $3,000 to$7,500, to $10,000 in 1986, and to $20,000 in 1987. Veteran exemptions range from $1,500 to $3,000, based on disability percentage.Agriculture valuations represent land used for ranching and farming.SOURCE:City of Laredo, Texas

PROPERTY TAX RATES - DIRECT AND OVERLAPPINGGOVERNMENTS - LAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 8LAREDOUNITEDINDEPENDENT INDEPENDENT LAREDOFISCAL CITY OF WEBB SCHOOL SCHOOL COMMUNITYPERIODS LAREDO COUNTY DISTRICT DISTRICT COLLEGETAX RATES (per $100 of assessed value)2002 0.57636 0.43634 1.42600 1.42687 0.216652003 0.63053 0.44446 1.50271 1.47687 0.226502004 0.64176 0.45792 1.50271 1.47687 0.236002005 0.63700 0.43792 1.47411 1.52687 0.236002006 0.63700 0.43792 1.55411 1.60687 0.233712007 0.63700 0.42006 1.49551 1.47436 0.230502008 0.63700 0.42006 1.27400 1.18487 0.222202009 0.63700 0.42006 1.27400 1.18487 0.221102010 0.63700 0.42006 1.27400 1.19486 0.227202011 0.63700 0.42005 1.27400 1.19486 0.23812TAX LEVIES2002 $ 29,221,694 $ 28,877,392 $ 18,828,678 $ 57,959,460 $ 11,215,8372003 33,435,345 33,424,545 20,378,959 66,951,115 12,892,4222004 38,455,159 35,073,016 21,344,510 72,156,593 14,540,0022005 43,209,681 38,284,553 24,426,783 83,821,422 16,320,7002006 47,466,862 42,351,341 26,644,992 100,665,114 17,727,3082007 53,559,195 50,623,052 27,671,836 113,168,711 19,720,0172008 59,584,704 51,752,884 25,966,124 95,866,850 21,192,7052009 65,642,009 55,559,866 27,408,723 108,147,626 23,297,6342010 66,926,927 56,069,370 27,210,755 111,038,081 24,304,8622011 $ 67,184,974 $ 57,474,928 $ 27,078,969 $ 112,407,770 $ 25,422,145SOURCES:City of Laredo, TexasWebb County Appraisal District Office225

SPECIAL ASSESSMENTS BILLINGS AND COLLECTIONS (1)LAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 9PERCENT OFTOTAL OUTSTANDINGFISCAL BEGINNING ASSESSMENTS ASSESSMENTS COLLECTIONS CURRENT AND DELINQUENTPERIODS BALANCE(2) BILLED COLLECTED OF AMOUNT DUE ASSESSMENTS2002 $ 427,081 38,836 194,697 41.79% 271,2202003 271,220 46,992 135,058 42.44% 183,1542004 183,154 142,202 170,888 52.52% 154,4682005 154,468 359,276 441,257 85.89% 72,4872006 72,487 528,851 574,196 95.49% 27,1422007 27,142 165,224 178,014 92.54% 14,3522008 14,352 99,592 106,800 93.73% 7,1442009 7,144 41,084 38,462 79.75% 9,7662010 9,766 16,420 17,142 65.46% 9,0442011 $ 9,044 $ 37,404 $ 38,578 83.06% $ 7,870NOTES:(1) The Charter of the City of Laredo allows the City Council to assess the costs of street paving and sidewalk constructionto the adjacent owners. Normally, this is collected in equal principal installments over a five year period with interestcomputed at eight percent.This assessment constitutes a lien against the property which may be foreclosed upon default.(2) Assessments beginning balance include Principal & Interest and are net of allowance for uncollectible.SOURCE:City of Laredo, Texas226

PRINCIPAL TAXPAYERSLAST TEN FISCAL PERIODS 2011City Of Laredo, TexasTable 102011 ASSESSED PERCENTAGEVALUATIONOF TOTALTYPE OF REAL & PERSONAL ASSESSEDTAXPAYER BUSINESS PROPERTY VALUATIONLaredo Texas Hospital Co. LP Hospital $103,826,630 0.98%AEP Texas Central Company Electricity 53,470,930 0.51%Mall Del Norte LLC Real Estate 51,752,510 0.49%The GEO Group Jail 49,979,180 0.47%Laredo Regional Medical Ctr. LP Medical Center 41,405,090 0.39%Electric Transmission of Texas Electricity 40,634,910 0.38%International Bank of Commerce Bank 39,034,053 0.37%Halliburton Energy Service Oil and Gas 37,396,790 0.35%Killam Ind Dev. Partnership LTD Partnership 30,492,340 0.29%H.E. Butt Grocery Company Real Estate 28,283,840 0.27%TOTAL $476,276,273 4.50%PRINCIPAL TAXPAYERSSEPTEMBER 30,20012001 ASSESSED PERCENTAGEVALUATIONOF TOTALTYPE OF REAL & PERSONAL ASSESSEDTAXPAYER BUSINESS PROPERTY VALUATIONCentral Power & Light Company Utility $47,833,500 1.02%Southwestern Bell Telephone Co. 29,792,450 0.63%Lone Star Mall Assoc. Mall 27,063,580 0.57%Killam In. Dev. Partnership Ltd. Development 24,565,230 0.52%Webb County Correctional Center Corrections Co. 21,233,370 0.45%U. S. Cold Storage Cold Storage 17,364,240 0.37%Transport International Pool, Inc. Transportation 16,757,460 0.36%H.E. Butt Grocery Co. Grocery 15,832,620 0.34%Southwestern Motor Transport, Inc. Freight 15,294,190 0.32%Paragon Cable Cable Co. 15,078,250 0.32%Total $230,814,890 4.90%Numbers show total comparison for principal taxpayers as of 2011 and 10 yrs ago.SOURCE:City of Laredo, Texas227

COMPUTATION OF LEGAL DEBTMARGIN AND AUTHORIZED ANDUNISSUED BONDSCITY OF LAREDO, TEXASTABLE 11The Constitution of Texas in Article 11, Section 5, limits the maximum amount that a home rulecity can tax to $2.50 per $100.00 of valuation and the same Article provides that no debt shallever be created by any city unless at the same a time provision is made to assess and collectannually a sufficient sum to pay the interest thereon and create a sinking fund of at least twopercent thereon. The Attorney General of Texas, in connection with the quoted provision, hascreated a rule for the guidance of home rule cities which states that the bond allowable underthis constitutional provision shall be on the basis of no greater than $1.50 per $100.00 ofvaluation unless the city charter provides for less than the maximum specified in theAttorney General's rule. City Charter Section 6.13, as amended in November 1995, limits thetotal overall outstanding debt to 10% of the total assessed valuation of the City. At this time, theCity has allocated approximately $.124696 of the total tax rate.Assessed value based on 2010 tax roll .......................................................................…………. $10,634,156,096Maximum amount of bonded indebtedness based on such assessed value (10%)..................... $1,063,415,610Amount of debt applicable to said maximum debt limit:Total General Obligation Bonds and Certificates of Obligations … $193,993,899(Percentage of G. O. and C. O. debt to assessed value) 1.82%Less: Debt Service Fund Balance as of September 30, 2011............. $8,272,028Total Amount of debt applicable to debt limit ...................................................................................... $185,721,871The Debt Margin between current indebtedness and maximum allowable indebtedness ........... $877,693,739228

RATIO OF NET GENERAL BONDED DEBT TO ASSESSEDVALUE AND NET BONDED DEBT PER CAPITALAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 12RATIO OFASSESSED VALUE GROSS LESS DEBT NET NET BONDED NET BONDEDFISCAL POPULATION FOR OPERATIONS BONDED SERVICE BONDED DEBT TO DEBT PERPERIODS (A) & DEBT SERVICE DEBT (1) FUNDS DEBT ASSESSED VALUE CAPITA2002 201,292 $ 5,558,982,217 $ 153,675,000 $ 5,455,502 $ 148,219,498 2.6663% 736.342003 207,611 6,018,438,664 151,940,000 5,537,538 146,402,462 2.4326% 705.182004 214,000 5,992,130,874 152,500,000 4,592,744 147,907,256 2.4684% 691.162005 215,375 6,783,309,499 153,725,000 5,634,547 148,090,453 2.1832% 687.592006 224,695 7,449,143,814 158,972,282 6,508,489 152,463,793 2.0467% 678.542007 231,470 8,408,036,926 221,132,050 5,946,381 215,185,669 2.5593% 929.652008 237,396 9,393,528,747 286,235,467 5,990,320 280,245,147 2.9834% 1,180.502009 233,152 10,385,975,045 358,833,263 6,636,000 352,197,263 3.3911% 1,510.592010 244,580 10,634,156,096 342,955,001 6,529,078 336,425,923 3.1636% 1,375.532011 236,091 $ 10,576,729,269 $ 334,374,769 $ 8,272,028 $ 326,102,741 3.0832% 1,381.26NOTES:(1) Includes General Obligation and Certificates of Obligation Bonds.SOURCES:City of Laredo, Texas(A) Information was obtained from City of Laredo Planning and Zoning Department229

RATIO OF ANNUAL DEBT SERVICE EXPENDITURESFOR GENERAL BONDED DEBT TO TOTAL GENERALGOVERNMENT EXPENDITURES (1)LAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 13INTEREST TOTAL TOTAL RATIO OF DEBTFISCAL & FISCAL DEBT GENERAL SERVICE TO GENERALPERIODS PRINCIPAL CHARGES SERVICE EXPENDITURES EXPENDITURESNOTES:2002 10,700,000 10,027,116 20,727,116 183,342,422 11.31%2003 12,255,000 9,857,015 22,112,015 174,087,134 12.70%2004 13,500,000 9,412,153 22,912,153 188,026,176 12.19%2005 14,395,000 9,138,859 23,533,859 184,891,173 12.73%2006 15,685,000 8,663,891 24,348,891 201,201,456 12.10%2007 15,195,000 9,242,752 24,437,752 210,990,264 11.58%2008 16,024,319 12,558,327 28,582,646 233,623,097 12.23%2009 17,490,000 15,990,496 33,480,496 263,773,010 12.69%2010 11,228,852 10,717,973 21,946,825 282,782,315 7.76%2011 10,246,364 10,866,914 21,113,278 286,323,852 7.37%(1) Total general expenditures consist of the General Fund, Special Revenue Funds, Debt Service Fund,Capital Projects Funds and Expendable Trusts.SOURCE:City of Laredo, Texas230

COMPUTATION OF DIRECT AND OVERLAPPING DEBTSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 14ESTIMATEDAMOUNTNET DEBT % APPLICABLE APPLICABLETAXING AUTHORITY OUTSTANDING (A) TO CITY (B) TO CITYDirect:City of Laredo $236,009,880 100.00% $236,009,880Overlapping:Webb County 69,149,000 70.750% 48,922,918Laredo Independent School District 210,439,211 100.00% 210,439,211United Independent School District 280,651,007 75.692% 212,430,360Laredo Community College 169,351,069 100.00% 169,351,069Total Overlapping 729,590,287 641,143,558Total $965,600,167 $877,153,438SOURCES:(A) Finance Departments of respective entities(B) Webb County Appraisal District231

SCHEDULE OF REVENUE BONDCOVERAGE BRIDGE, WATER, SEWERSYSTEM AND SPORTS VENUELAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 15REVENUETOTAL OPERATING NET REVENUE -----DEBT SERVICE REQUIREMENTS----- BONDFISCAL REVENUE EXPENSE AVAILABLE FOR COVERAGEPERIODS (1) (2) DEBT SERVICE PRINCIPAL INTEREST TOTAL (3)Bridge 34,408,912 8,413,669 25,995,243 3,525,000 3,697,409 7,222,409 3.60Water 16,773,484 9,363,511 7,409,973 705,000 416,018 1,121,018 6.61Sewer 13,158,360 6,389,656 6,768,704 4,905,000 295,135 5,200,135 1.30Sports Venue 4,524,646 80,244 4,444,402 - 2,049,266 2,049,266 2.17Total 2002 68,865,402 24,247,080 44,618,322 9,135,000 6,457,828 15,592,828 2.86Bridge 34,836,756 8,728,556 26,108,200 4,110,000 2,768,415 6,878,415 3.80Water 15,427,690 9,122,153 6,305,537 725,000 408,121 1,133,121 5.56Sewer 12,969,437 7,399,556 5,569,881 870,000 216,629 1,086,629 5.13Sports Venue 4,737,203 46,281 4,690,922 430,000 2,039,591 2,469,591 1.90Total 2003 67,971,086 25,296,546 42,674,540 6,135,000 5,432,756 11,567,756 3.69Bridge 35,574,197 9,210,546 26,363,651 4,320,000 2,476,347 6,796,347 3.88Water 15,902,648 9,801,112 6,101,536 6,645,000 427,893 7,072,893 0.86Sewer 13,296,851 6,648,103 6,648,748 885,000 252,868 1,137,868 5.84Sports Venue 5,188,849 68,889 5,119,960 525,000 2,018,104 2,543,104 2.01Total 2004 69,962,545 25,728,650 44,233,895 12,375,000 5,175,212 17,550,212 2.52Bridge 39,231,949 10,020,392 29,211,557 5,482,228 4,039,577 9,521,805 3.07Water 18,736,504 10,991,334 7,745,170 943,000 467,131 1,410,131 5.49Sewer 14,409,247 6,811,361 7,597,886 727,000 355,530 1,082,530 7.02Sports Venue 6,169,250 39,752 6,129,498 625,000 1,922,269 2,547,269 2.41Total 2005 78,546,950 27,862,839 50,684,111 7,777,228 6,784,507 14,561,735 3.48Bridge 42,757,164 10,851,262 31,905,902 3,866,378 4,482,527 8,348,905 3.82Water 24,047,927 14,010,809 10,037,118 1,263,000 704,275 1,967,275 5.10Sewer 14,010,809 8,486,409 5,524,400 839,000 458,565 1,297,565 4.26Sports Venue 6,614,948 173,785 6,441,163 930,000 1,818,838 2,748,838 2.34Total 2006 87,430,848 33,522,265 53,908,583 6,898,378 7,464,205 14,362,583 3.75(Continued)232

SCHEDULE OF REVENUE BONDCOVERAGE BRIDGE, WATER, SEWERSYSTEM AND SPORTS VENUELAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 15(Continued)REVENUETOTAL OPERATING NET REVENUE -----DEBT SERVICE REQUIREMENTS----- BONDFISCAL REVENUE EXPENSE AVAILABLE FOR COVERAGEPERIODS (1) (2) DEBT SERVICE PRINCIPAL INTEREST TOTAL (3)Bridge 41,642,971 11,426,566 30,216,405 3,940,134 4,313,536 8,253,670 3.66Water 26,483,082 15,098,280 11,384,802 1,558,000 986,146 2,544,146 4.47Sewer 14,149,488 9,533,193 4,616,295 951,000 629,571 1,580,571 2.92Sports Venue 7,344,091 240,967 7,103,124 1,040,000 1,777,551 2,817,551 2.52Total 2007 89,619,632 36,299,006 53,320,626 7,489,134 7,706,804 15,195,938 3.51Bridge 48,757,080 12,003,151 36,753,929 4,000,070 4,144,681 8,144,751 4.51Water 27,357,618 17,030,252 10,327,366 1,833,000 1,279,557 3,112,557 3.32Sewer 14,641,635 9,510,247 5,131,388 1,058,000 925,800 1,983,800 2.59Sports Venue 7,246,612 292,815 6,953,797 1,160,000 1,731,163 2,891,163 2.41Total 2008 98,002,945 38,836,465 59,166,480 8,051,070 8,081,201 16,132,271 3.67Bridge 43,724,135 11,499,210 32,224,925 4,171,233 4,151,127 8,322,360 3.87Water 28,883,564 17,782,323 11,101,241 2,158,000 1,121,489 3,279,489 3.39Sewer 20,362,272 9,431,314 10,930,958 1,364,000 890,814 2,254,814 4.85Sports Venue 6,509,630 469,113 6,040,517 1,285,000 1,679,338 2,964,338 2.04Total 2009 99,479,601 39,181,960 60,297,641 8,978,233 7,842,768 16,821,001 3.58Bridge 46,097,657 11,365,703 34,731,954 4,863,665 3,923,865 8,787,530 3.95Water 29,152,173 17,217,851 11,934,322 6,505,300 6,019,456 12,524,756 0.95Sewer 22,808,510 12,091,058 10,717,452 4,944,669 2,958,338 7,903,007 1.36Sports Venue 6,193,405 541,473 5,651,932 1,430,000 1,616,288 3,046,288 1.86Total 2010 104,251,745 41,216,085 63,035,660 17,743,634 14,517,947 32,261,581 1.95Bridge 46,511,403 11,577,331 34,934,072 5,087,435 3,697,171 8,784,606 3.98Water 35,136,866 17,237,107 17,899,759 9,544,541 8,737,268 18,281,809 0.98Sewer 27,603,852 12,615,092 14,988,760 5,176,563 3,083,142 8,259,705 1.81Sports Venue 6,993,484 285,418 6,708,066 1,575,000 1,539,194 3,114,194 2.15Total 2011 116,245,605 41,714,948 74,530,657 21,383,539 17,056,775 38,440,314 1.94NOTE:(1) Includes Operating Revenue and Interest Earnings.(2) Includes Operating Expenses other than Interest Expense, Depreciation, Amortization, and other non-operating expenses.(3) Revenue Bond Coverage is equal to Net Revenue Available for Debt Service divided by total Debt Service Requirements.SOURCE:City of Laredo, Texas233

GENERAL CERTIFICATES CAPITAL CAPITAL GENERAL CERTIFICATESOBLIGATION OF REVENUE LEASE NOTES REVENUE NOTES LEASE OBLIGATIONS OFFISCAL YEAR BONDS OBLIGATION BONDS OBLIGATIONS PAYABLE BONDS PAYABLE OBLIGATIONS BONDS OBLIGATIONS2002 $ 83,630,000 $ 70,045,000 $ 39,315,000 $ 1,302,201 $ 1,445,000 $ 60,733,150 $ 35,435,119 $ 24,767 $ - $ -2003 87,705,000 77,210,000 39,410,000 2,023,643 1,445,000 60,471,080 35,760,468 - - -2004 74,435,000 78,065,000 38,360,000 1,482,916 1,275,000 70,500,273 37,233,251 - - -2005 88,040,000 65,685,000 37,135,000 1,960,619 1,190,000 95,751,703 25,519,803 - - -2006 79,690,000 76,250,000 36,205,000 2,629,868 1,105,000 104,293,969 24,513,658 - - -2007 72,200,000 145,745,000 35,165,000 5,165,702 1,020,000 116,533,053 23,478,758 - - -2008 64,585,000 218,255,000 34,005,000 3,297,905 935,000 114,675,138 22,413,922 - - -2009 27,989,344 172,020,000 32,720,000 1,730,061 850,000 108,065,223 21,317,923 - 32,100,655 115,815,0002010 24,945,491 167,815,685 31,290,000 938,307 765,000 107,656,600 20,494,474 - 26,894,509 123,299,3162011 $ 25,154,037 $ 168,839,892 $ 40,160,000 $ 1,175,951 $ 680,000 $ 181,297,000 $ 19,637,040 $ - $ 26,835,731 $ 113,545,109RATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL PERIODSCITY OF LAREDO, TEXASTABLE 16GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES234TOTAL PERCENTAGEPRIMARY PERSONAL PER OF PERSONALGOVERNMENT INCOME CAPITA INCOME2002 $ 291,930,237 $ 3,576,468,000 $ 1,450 $ 8.16%2003 304,025,191 3,793,956,000 1,464 8.01%2004 301,351,440 4,041,613,000 1,477 7.46%2005 315,282,125 4,454,781,000 1,464 7.08%2006 324,687,495 4,748,324,000 1,445 6.84%2007 399,307,513 5,077,310,000 1,725 7.86%2008 458,166,965 5,567,524,000 1,930 8.23%2009 512,608,206 5,624,141,000 2,199 9.11%2010 504,098,782 5,977,993,000 2,061 8.43%2011 $ 577,324,760 $ not available $ 2,445 $ not availableNOTES:(1) Median income data for calculation of Percentage of Personal Income calculation for 2011 fiscal year were unavailable when report was compiled.SOURCE:City of Laredo, TexasBureau of Economic Analysis, U.S. Department of Commerce

DEMOGRAPHICS STATISTICSLAST THREE CENSUSCITY OF LAREDO, TEXASTABLE 171990 2000 2010CENSUS CENSUS CENSUSTOTAL POPULATION BY RACE:WHITE 87,048 145,267 207,067BLACK 144 652 1,110OTHER 35,707 31,524 27,914HISPANIC PERCENTAGE 93.86% 94.10% 95.62%TOTAL HOUSEHOLDS 33,998 46,852 68,610HOUSEHOLD POPULATION 122,899 173,532 214,484AVERAGE HOUSEHOLD SIZE 3.61 3.70 3.64TOTAL POPULATION BY AGE:0-5 17,081 18,516 24,4246-13 20,316 18,620 49,27314-17 10,093 16,054 14,46118-24 17,987 29,608 27,27525-34 20,316 28,489 35,15634-44 14,752 23,657 34,33244-54 9,964 17,104 27,23554-64 8,541 10,746 18,64165+ 10,223 13,782 19,507MEDIAN AGE TOTAL POPULATION 24.7 26.9 27.8MEDIAN AGE ADULT POPULATION 36.8 36.8 38.6HOUSEHOLD INCOME:$ 0 - $ 7,499 7,639 5,398 N/A$ 7,500 - $ 9,999 3,074 1,799 N/A$ 10,000 - $ 14,999 4,169 4,996 10,504$ 15,000 - $ 24,999 5,600 8,208 7,332$ 25,000 - $ 34,999 3,865 6,814 7,628$ 35,000 - $ 49,999 3,226 7,078 9,130$ 50,000 - $ 74,999 1,765 6,780 9,947$ 75,000 1,096 5,835 14,036MEDIAN HOUSEHOLD INCOME $15,610 $29,108 $36,784AVERAGE HOUSEHOLD INCOME N/A N/A 57,545MEDIAN FAMILY INCOME 17,532 30,449 38,029AGGREGATE HOUSEHOLD INCOME $708,920 N/A $2,247,434PERSONAL INCOME $1,264,416,000 $2,933,682,000 $5,624,141,000SOURCE:(Continued)Laredo Chamber of Commerce235

DEMOGRAPHIC STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 17(Continued)FISCAL CIVILIAN LABOR UNEMPLOYMENTPERIODS FORCE UNEMPLOYMENT RATE EMPLOYMENTSOURCE:2002 75,639 5,028 6.60% 70,6112003 76,985 4,998 6.50% 71,9872004 81,839 4,655 6.52% 77,1842005 81,721 4,103 5.00% 77,6182006 86,447 3,938 4.60% 82,5092007 84,800 3,680 4.30% 81,1202008 86,187 4,647 5.40% 81,5402009 91,457 7,756 8.50% 83,7012010 90,396 6,776 7.50% 83,6202011 93,034 7,230 7.80% 85,804Texas Labor Market InformationNumbers as of September 30 for each year236

DEMOGRAPHIC STATISTICSLAST TEN FISCAL YEARSCITY OF LAREDO, TEXASTABLE 17(Continued)G R O W T H I N D I C A T O R S (2)FISCALPOSTALPERIODS ELECTRIC (1) GAS WATER SEWER RECEIPTS (3)NOTES:2002 63,946 23,543 49,158 47,041 8,955,0002003 66,504 23,717 50,997 48,715 13,850,0002004 69,164 23,414 52,754 50,282 14,680,0002005 72,604 23,852 55,252 52,565 15,510,0002006 70,083 24,102 57,489 54,568 16,420,0002007 72,624 28,486 59,409 56,065 17,120,0002008 78,080 28,477 60,519 57,851 18,142,0002009 75,042 28,680 61,171 57,903 19,132,0002010 75,497 28,862 62,195 58,726 18,500,6442011 77,141 28,942 63,703 59,955 18,186,133(1) Electric increase was estimated by 4.00% for 2002 - 2004. For 2008, the total is as ofDecember 31, 2008(2) Amount represents number of active customer accounts.(3) Represents total revenue collected.* Legislation prohibits disclosure of telephone accounts information.SOURCES:Finance Department of respective entities237

2002 698 $ 182,767,445 1424 $ 123,932,146 $ 6,390,861,000 $ 2,049,091,128 $ 2,851,889,227 $ 258,396,087 $ 896,821,8682003 860 71,199,808 1495 128,619,147 6,671,288,000 2,216,703,462 3,075,832,429 297,613,702 519,598,7492004 1020 150,716,661 1342 126,225,481 9,050,235,000 2,665,287,322 3,214,021,140 298,947,650 623,203,2602005 1132 178,001,202 1847 198,367,334 9,080,074,000 3,003,777,851 3,643,413,881 284,434,270 575,505,3902006 721 166,713,553 2281 221,625,892 9,871,067,000 3,251,967,681 4,022,266,136 307,462,870 605,370,5502007 520 180,125,787 2024 198,450,164 10,830,093,000 3,538,252,162 4,689,485,109 342,911,010 670,387,6102010 110 70,266,920 622 96,580,902 8,183,979,000 4,571,159,052 6,448,188,579 377,615,393 773,831,2232011 85 $ 94,785,851 641 $ 108,466,180 $ 8,478,675,000 $ 4,460,292,962 $ 6,488,371,519 $ 374,194,726 $ 761,010,658PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITSLAST TEN FISCAL PERIODS (10)CITY OF LAREDO, TEXASTABLE 18PROPERTY VALUE (A)COMMERCIAL CONSTRUCTION (A) RESIDENTIAL CONSTRUCTION (A)FISCAL NUMBER NUMBER BANK (B)PERIODS OF UNITS VALUE OF UNITS VALUE DEPOSITS COMMERCIAL RESIDENTIAL VACANT PROPERTY EXEMPTIONS (1)2382008 278 152,367,779 1250 132,572,308 7,606,202,000 3,971,864,502 5,699,588,209 369,653,970 647,577,9342009 148 52,017,727 709 96,056,087 7,592,090,000 4,402,760,384 6,257,490,215 397,063,450 671,339,004NOTES:(1) Total exemptions include Homestead, Veteran, Agricultural exemptions. Homestead valuations increased in 1983 from $3,000 to $7,500, to $10,000 in 1986, and to$20,000 in 1987. Veterans valuations range from $1,500 to $3,000 based on disability percentage. Agriculture valuations represent land used forranching and farming.SOURCES:(A) City of Laredo, Texas(B) Commerce Bank N.A.Falcon International BankInternational Bank of CommerceTexas Community Bank, N.A.Note: Limited to locally-owned banks.

PRINCIPAL EMPLOYERSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 19PERCENTAGENUMBER OFOF TOTAL CITYEMPLOYER EMPLOYEES EMPLOYMENTUnited Independent School District 6,179 7.39%Laredo Independent School District 4,500 5.38%City of Laredo 2,371 2.84%U.S. Border Patrol 2,000 2.39%H.E.B. Grocery 1,626 1.94%Webb County 1,500 1.79%Laredo Medical Center 1,300 1.55%McDonald's Restaurants 1,200 1.44%Texas A & M International University 1,215 1.45%Wal-Mart 937 1.12%PRINCIPAL EMPLOYERSSEPTEMBER 30, 2001United Independent School District 3,675 5.49%Laredo Independent School District 3,349 5.00%City of Laredo 2,100 3.14%Mercy Regional Medical Center 3,000 4.48%H.E.B Grocery Store 1,247 1.86%Webb County 1,165 1.74%Laredo Community College 1,012 1.51%U.S. Border Patrol 1,007 1.50%McDonald's Restaurants 800 1.19%Texas A&M Int'l University 696 1.04%Principal Employers numbers as of September 2011 and 10 years ago.SOURCE:Laredo Development Foundation239

PRINCIPAL WATER CONSUMERSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 20PRODUCT ORTYPE OF BUSINESS SERVICE CONSUMPTION (1)Laredo Medical Center Hospital 142,255,100Texas A&M International University Education 81,455,400Laredo Community College Education 43,159,500United High School Education 32,806,200Laredo Municipal Housing Corp. Housing 31,427,500New Webb County Jail County Jail 22,542,900Laredo Regional Medical Center Hospital 21,576,900La Bota Ranch Owner Association Housing 16,452,500Towne North Mobil Homes Housing 14,606,300Winfield Community Association Housing 12,434,200PRINCIPAL WATER CONSUMERSSEPTEMBER 30, 2001PRODUCT ORTYPE OF BUSINESS SERVICE CONSUMPTION (1)Mercy Health Center Hospital 84,256,000Texas A&M International University School 38,841,300Webb County Jail County 20,946,700Bovis Construction Company Industry 19,089,400CP&L Power Plant Electricity 16,319,600City of Laredo Government 15,249,300Laredo Regional Medical Center Hospital 14,554,900Holiday Inn-Laredo Storage 14,183,900United High School School 13,836,301Landa Property Management Service 13,259,000(1) Total consumption by gallon.Numbers show total comparison for principal water consumers as of fiscal year 2011 and 10 years ago.SOURCE:City of Laredo, Texas240

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21GeneralForm of Government:Terms of Office:City Manager & City CouncilMayor-4 Year Term (2 Terms Maximum)City Council-4 Year Staggered Terms (2 Terms Maximum)City Manager-Appointed by City CouncilDate of First Charter Adoption: 1848Date of Original Public SaleOf Town Lots: 1880Second Charter: February 23, 1911Home Rule Amendment to Charter: January 29, 1921Amendments to Charter: July 8, 1941, January 8, 1946, October 9, 1951, April 3, 1962,November 30, 1965, January 14, 1981, January 16, 1988, November 7, 1995 andAugust 28, 2006Number of City Employeesas of September 30,2011 2,308Number of City Departmentsas of September 30, 2011 21Area in Square Miles by ten year periods for the last 50years and annually for the last ten years.YEAR LAND AREA INCREASE TOTAL1960 13.12 - 13.121970 13.12 7.12 20.241980 20.24 13.26 33.501990 33.50 4.57 38.072000 38.07 1.13 79.952001 79.95 4.48 81.372002 81.37 1.12 81.712003 81.71 1.42 83.972004 83.97 0.34 84.402005 84.40 2.26 85.752006 85.75 0.26 86.012007 86.01 2.95 88.962008 88.96 0.36 89.532009 89.53 - 89.532010 89.53 0.87 90.402011 90.40 1.66 92.06241

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21ElectionscontinuedNumber of Registered Voters: 105,422Number of Votes cast inLast Municipal Election: Nov 10 28,873% of Registered Voter voting inLast Municipal Election: 28.06%TRANSPORTATIONAIRPORTSNumber of Airports: 1Name of Airport:Scheduled Airplane FlightsPer Day Departing:Scheduled Airplane FlightsPer Day Arriving:Passengers Enplaning:Passengers Deplaned:Laredo International AirportFlights daily to/fromHouston, Dallas, Las Vegas,& OrlandoMonday - Friday 8 flights per daySaturday - Sunday 8 flights per dayMonday - Friday 8 flights per daySaturday - Sunday 8 flights per day104,688 per year103,485 per yearBRIDGESNumber of Bridges: 4Name of Bridges: Gateway to the Americas BridgeJuarez - Lincoln International BridgeColombia Solidarity BridgeWorld Trade BridgeNumber of crossing Pick-ups,Motorcycles, Autos & 2 AxleVehicles: 4,401,849Number of crossing CommercialVehicles: 1,725,335Number of crossing Pedestrian(includes bicycles): 3,161,627Total Tolls $43,638,202242

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21RAILROADScontinuedNumber of Railroads: 4Names of Railroads: Texas-Mexican RailroadUnion Pacific RailroadAmerican President LinesPacer StacktrainHIGHWAYSNumber of Highways: 4Name of Major HighwaysIH 35, To San Antonio, Dallas & North to The Candian BorderHwy. 59 - To Houston, New Orleans & EastHwy. 359 - To Corpus ChristiHwy. 83 - To Brownsville (east) & El Paso (west)BUS LINESName of Local Bus line:Laredo Transportation Management Inc. (El Metro)El Aguila Rural Transportation (Webb County)Number of Adult Passengers: 1,754,508Number of Elderly & Handicapped Paid: 222,634Number of Elderly & Handicapped Free: 516,452Number of Students: 190,553Number of Children Paid: 101,030Number of Children Free: 73,075Number of Transfers: 306,308Number of I.D. cards for elderly 4,144Number of Medical Cards 1,577Number of Service Miles: 1,953,600Number of Charter Miles:n/aNumber of Employees: 178Name of Interstate Bus Lines:Autobuses Latinos de GreyhoundEl ConejoAmericanos USAValley TransitSendorKerrville Bus Company243

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21FIRE PROTECTIONcontinuedNumber of Stations: 14Number of Hydrants: 3,257Number of Fire Pumpers: 14Number of Aerial Trucks: 3Number of Ambulances: 10Number of Crash Trucks: 1Number of Brush Trucks 7Number of Haz-Mat Trucks: 1Number of Firefighters: 357Number of EMS Paramedics: 223Employees per 1,000 population: 1.4POLICE PROTECTIONNumber of Stations:1 Police HeadquartersNumber of Neighborhood PolicingStations: 18Number of Sworn Officers: 426Number of Vehicular Patrol Units: 381Employees per 1,000 Population: 1.804Number of Law Violations: 32,735Number of Physical Arrests: 7,827Number of Traffic Violations: 29,655Number of 911 Calls: 120,567Number of Non-911 Calls: 271,832MEDICAL FACILITIESNumber of Hospitals: 4Number of Clinics: 59Number of Nursing Homes: 3Number of Ambulance Services: 12244

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21PUBLIC WORKScontinuedWATERWORKS SYSTEMMiles of Water Mains: 711Daily Average Consumption:Plant Capacity:Storage Capacity:Water Rights Owned:Source of Water:40 Million GDP65 M.G.D.45.162 M.G.52,701 A.C./F.T.Rio GrandeNumber of Service Connections: 63,703SEWER SYSTEMMile of Sanitary Sewer: 498Number of Lift Stations: 72Daily Average Treatment:Maximum Capacity ofTreatment Plants:17.9 MGD24.7 MGDNumber of Disposal Plants: 6Number of Service Connections: 59,955SOLID WASTENumber of Garbage Connections: 55,839Solid Waste Disposal Type:LandfillSTREETSNumber of Paved Streets: 10,622Number of Unpaved Streets:Miles of Paved Streets:Miles of Unpaved Streets:16 Blocks663 Miles16 Blocks245

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21EDUCATIONALcontinuedLAREDO INDEPENDENT SCHOOL DISTRICTNumber of Senior High Schools: 4Number Of Magnet Schools: 3Number of Classrooms: 467Number of Administrative Personnel: 20Number of Teachers 408Number of Students: 5,395Annual Budget: $38,495,348Number of Middle Schools: 4Number of Classrooms: 277Number of Administrative Personnel: 15Number of Teachers: 329Number of Students: 4,550Annual Budget $26,629,407Number of Elementary Schools: 20Number of Classrooms: 835Number of Administrative Personnel: 45Number of Teachers: 809Number of Students: 13,697Annual Budget: $69,052,448246

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21UNITED INDEPENDENT SCHOOL DISTRICTcontinuedNumber of Senior High Schools: 4Number Of Magnet Schools: 3Number of Classrooms: 590Number of Administrative Personnel: 103Number of Teachers: 719Number of Students: 12,096Annual Budget: $65,750,280Number of Middle Schools: 9Number of Classrooms: 431Number of Administrative Personnel: 82Number of Teachers: 582Number of Students: 9,587Annual Budget: $49,058,968Number of Elementary Schools: 27Number of Classrooms: 1,182Number of Administrative Personnel: 157Number of Teachers: 1,205Number of Students: 20,511Annual Budget: $100,785,733247

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21LIBRARIEScontinuedNumber of Public Libraries: 1Number of Volumes: 277,924Circulation transactions: 477,868Circulation per Capita: 2.02New Library Cards Issued: 22,036Library Cards in Force: 158,813Number of Subscriptions: 249Number of Titles: 214,881Number of Library Visits: 335,396Number of Materials Used: 109,894Library Programs Presented: 1,374Number Attending Library Programs: 53,729Bookmobiles: 1Branches and Outlets: 1PRIVATE SCHOOLSNumber of Parochial Schools: 38Vocational Training Centers: 14COMMUNICATIONSNumber of Daily Newspapers 1Major Newspaper:Laredo Morning TimesNumber of Radio Stations: 8Number of TV Stations: 7Number of Cable Television Companies: 1Number of Satellite Companies: 2248

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21TEXAS A&M INTERNATIONAL UNIVERSITYcontinuedDate Established: Established in 1970 as a division of Texas A & I,and as a separate University in 1977 as a division of theUniversity System of South Texas. The University became a memberof the Texas A&M U. System on September 1, 1989.Programs Offered: Undergraduate & Graduate, and Doctoral degrees are offered by the Colleges ofBusiness Administration, Education,Arts & Humanities & Science & Tech.Population served: Undergraduate/Graduate level college studentsseeking Liberal Arts, Education, Psycology,Business, International Trade, Science andTechnology DegreesRegion Served:South Texas RegionNumber of Classrooms/Labs: 119Number of Administrators: 145Number of Full-Time Faculty: 192Number of Part-Time Faculty: 82Number of Full-Time Students: 4,023Number of Part-Time Students: 3,015LAREDO COMMUNITY COLLEGEDate Founded: 1947Programs Offered:Asociates of Art , Degrees in EngineeringEducation, Medicine, Dentistry, Nursing,Law, Business Administration,Computer Science and VocationalEducation.Number of Classrooms (Inc. labs): 331Total Gross Square Footage:1,054,327 Sq. Ft.Number of Administrative Personnel: 154Number of Full Time Faculty: 196Number of Part Time Faculty: 130Number of Full Time Students: 3,777Number of Part Time Students: 6,302Counties Served:Webb, Jim Hogg, ZapataTotal Annual Budget: $48,314,684249

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21RECREATIONALcontinuedPARKSNumber of Acres Maintained: 877.9Number of Parks: 72Number of Plazas: 4Baseball & Softball Fields: 47Number of Swimming Pools: 6Number of Soccer Fields: 22Number of Tennis Court Facilities:Number of Raquetball Facilities:18 courts in 5 facilities5 courts in 2 facilitiesNumber of Recreational Centers: 7Number of Splash Parks 6Number of Skate Parks 8CEMETERYCity: 1Catholic: 1Private: 1Burials Served: 204Cemetery Lots Sold: 106LODGING/MEETING FACILITIESNumber of Hotels/Motels:42 with 4,012 roomsMeeting Facilities: 67250

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21MAJOR ATTRACTIONScontinuedNumber of Rodeo Arenas: 2Number of Museums: 5Number of Golf Courses: 2Number of Tennis Courts: 20Number of Tennis Court Facilities: 5Number of Malls: 1Number of Bowling Alleys: 1Number of Movie Theaters: 3Number of Country Clubs: 1Annual Festivities:Laredo International Sister Cities FestivalWashington Birthday Celebration in FebruaryJamboozieMiss Laredo PageantFounder's Day in MayMiss Texas USA Pageant4th of July CelebrationSOS ConcertAutmus Fest16 de SeptiembreNavidadfestBorder OlympicsInt.'l Cycling Circuit RaceCIVIC CENTERAuditorium:Banquet & Exibit Hall:Meeting Rooms:1 with 1,979 Seats20,440.8 sq ft(1,400 seats)4 Meeting Roomswith capacity of64 Per RoomCHURCHESParking Spaces: 962Number of Catholic Churches:20, including 5 MissionsNumber of Synagogues: 1Other Churches: 63251

MISCELLANEOUS STATISTICSSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 21SPORTS ARENAcontinuedSquare Feet: 178,000Seat Capacity: 10,000Luxury Suites: 14Meeting Rooms: 6Food Courts: 8Team Stores: 1Parking Spaces 2,000Major AttractionCFL Hockey Team: The Laredo BucksIndoor Football: Laredo RattlesnakesSOURCES:Finance Department, City of LaredoLaredo Chamber of CommerceLaredo Community CollegeLaredo Independent School DistrictTexas A&M International UniversityUnited Independent School DistrictLaredo Entertainment Center252

INSURANCE IN FORCE FOR THE CITY OF LAREDOINCLUDING THE INTERNATIONAL TOLL BRIDGE SYSTEMLAREDO WATERWORKS SYSTEM, AND THE LAREDOSEWER SYSTEMSEPTEMBER 30, 2011CITY OF LAREDO, TEXASTABLE 22DESCRIPTION TYPE OF COVERAGE POLICY LIMITBUILDINGS Fire and Extended Coverage (1) $364,747,333ALL PREMISES General Liability 1,000,000VEHICLES Automobile Liability 1,000,000Auto Physical DamagePER SCHEDULE, ACTUAL CASH VALUELIABILITY Errors & Ommissions 1,000,000Public Employee Dishonesty 1,000,000PROPERTY Mobile Equipment 15,561,782Boiler & Machinery Per Accident 5,000,000AIRPORT LIABILITY Comprehensive General Liability, Primary Policy 20,000,000Personal Injury Liability Coverage Excess Policy 50,000,000Airport Control Tower OperationsPER OCCURANCELAW ENFORCEMENT Law Enforcement Liability 1,000,000PUBLIC OFFICIALS Personal Injury and errors and ommissions 1,000,000WORKER'S COMPENSATION All City employees for all funds- STANDARD POLICY/Employer's Liability (2)STATUTORY LIMITSAIRPORT - FEDERAL TRADE ZONE Federal Trade Zone Operator's Bond $50,000NOTES:(1) The property Fire and Extended Coverage Policy includes all Buildings owned by the City of Laredo and the contentsof particular buildings. It also provides coverage for use occupancy and business interruptions for the four International Bridgesoperated by the City's International Toll Bridge System.(2) Includes Volunteers and Elected Officials.SOURCE:City of Laredo, Texas253

FULL-TIME EQUIVALENT CITY GOVERNMENTEMPLOYEES BY FUNCTIONLAST SIX FISCAL YEARS (1)CITY OF LAREDO, TEXASTABLE 23FULL-TIME EQUIVALENT EMPLOYEES AS OF SEPTEMBER 30FUNCTION 2011 2010 2009 2008 2007 2006General Government 349.10 347.10 339.10 332.10 323.29 316.99Public SafetyPoliceOfficers 482.00 455.00 455.00 455.00 399.00 411.00Civilians 89.00 89.00 89.00 89.00 105.00 84.00FireFirefighters and Officers 357.00 357.00 357.00 350.00 333.00 333.00Civilians 10.00 10.00 10.00 9.00 9.00 8.00Other Civilians 62.00 62.00 62.00 62.00 61.00 60.00Public Works 118.00 118.00 118.00 119.00 113.50 83.50Health and Welfare 289.88 279.88 251.88 250.55 248.88 257.60Culture and Recreation 245.93 245.93 245.93 241.93 238.68 231.28Air Transportation 48.00 47.00 42.00 37.00 43.00 41.00Bridge System 207.00 207.00 218.00 212.00 212.00 213.00Solid Waste Management System 128.00 132.00 168.00 168.00 169.00 169.00Water System 188.00 188.00 179.00 169.00 179.00 146.00Sewer System 72.00 72.00 69.00 69.00 69.00 48.00Transit System 185.10 184.70 184.70 179.31 179.31 179.31Municipal Housing 11.00 11.00 11.00 11.00 11.25 10.25Total 2,842.01 2,805.61 2,799.61 2,753.89 2,693.91 2,591.93Notes:(1) This table was implemented by GASB starting on fiscal year 2006.SOURCE:City of Laredo Budget Department254

OPERATING INDICATORS BY FUNCTIONLAST THREE FISCAL YEARS (1)CITY OF LAREDO, TEXASTABLE 24FISCAL YEAR FISCAL YEAR FISCAL YEARFUNCTION 2009 2010 2011PolicePhysical arrests 8,319 7,832 7,827Vehicle inspections (Used Dealerships 818 29 34Bridge operations conducted 134 115 63Emergency calls 189,312 158,922 120,567Non-emergency calls 288,998 222,698 271,832Dispatched calls 478,310 381,620 392,399Public awareness/training/education 65 63 108FireFire department responses 8,002 9,333 9,092Inspections 3,067 1,873 1,712Arson cases investigated 84 80 87Public education presentations 65 77 81Public WorksStreet resurfaced 600 490 462Potholes repaired 23,733 23,967 22,247BridgePedestrian crossings 4,124,272 3,746,170 3,161,627Gateway passes sold 4,010,461 3,638,851 3,110,189Non-commercial vehicle crossings 3,644,695 4,669,024 4,401,849Commercial vehicle crossings 1,400,969 1,575,893 1,725,335Non-commercial AVI accounts 13,000 14,033 10,448Commercial AVI accounts 2,150 2,819 3,388Culture and recreationCommunity center admissions 294,342 365,265 345,442Community service special events 74 63 71After school programs 11 14 7Transit SystemPassenger ridership 3,369,008 3,365,661 2,858,252Miles driven 1,980,520 1,968,004 1,953,600SanitationHousehold customers 54,588 54,850 55,839Refuse collected (tons) 100,083 95,384 104,680Recyclables collected (tons) 3,385 4,200 3,684WaterAverage daily consumption (millions of gallons) 37.96 32.60 40.00Meters read 60,880 61,675 63,031Service calls 6,973 6,943 7,561WastewaterAverage daily sewage treatment 17.45 18.00 17.90(millions of gallons)AirportCommercial Service Airlines 3 3 3Land/Building Leases 90 89 83Inbound/Outbound Passengers serviced 203,854 221,558 208,173Scheduled Flights per day 8 8 8Notes:(1) This table was implemented by GASB starting on fiscal year 2006.SOURCE:City of Laredo, Texas255

CAPITAL ASSETS STATISTICS BY FUNCTIONLAST FIVE FISCAL YEARS (1)CITY OF LAREDO, TEXASTABLE 25FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEARFUNCTION 2011 2010 2009 2008 2007Public SafetyPolice:Stations 18 18 18 18 18Patrol Units 381 468 413 433 470Fire:Stations 14 14 14 14 14EMS Units 10 9 13 13 9Ladder Trucks 3 3 3 3 3Pumper Trucks 14 14 17 18 14Highways and StreetsPublic Works:Streets - lane miles 663 660 656 641 631Traffic:Traffic Signals 243 246 243 241 239Street Lights 13,649 13,261 13,087 13,035 12,800Other Traffic Control Signs 34,209 33,775 33,475 32,500 31,500Bridge SystemInternational Bridges 4 4 4 4 4Culture and RecreationParks Acreage 882 878 838 1,035 738Parks 72 71 70 64 71Swimming Pools 6 6 6 6 6Community Centers 8 10 8 8 7Convention Centers 1 1 1 1 1Transit SystemBuses 47 48 47 47 47Trolleys 2 3 2 2 2SanitationCollection Trucks - Rear Loaders 23 20 21 21 25Collection Trucks - Automated 41 41 31 29 29Collection Trucks - Dump Trucks 0 3 3 4 4Collection Trucks - Grapplers 5 6 6 6 2WaterWater Mains (miles) 711 702 702 681 660Fire Hydrants 3,257 3,221 3,155 2,920 2,740Maximum Daily Capacity(millions of gallons) 65 65 65 65 65WastewaterSanitary Sewer (miles) 498 450 491 473 426Maximum Daily Treatment Capacity(millions of gallons) 24.7 22.70 21.10 21.00 21.05Environmental ServicesStorm Drainage (miles) 183 230 202 121 113Air TransportationAirports 1 1 1 1 1Notes:(1) This table was implemented by GASB starting on fiscal year 2006.SOURCE:City of Laredo, Texas256

CONTINUING DISCLOSURE INFORMATION257

The following tables are hereby submitted in order to comply with the requirements of theSecurities and Exchange Commission Rule 15c2-12 for Continuing Disclosures of Informationrelated to the new bonds issued during fiscal years 2002, 2003, 2004, 2005, 2006, 2007, 2008,2009, 2010, and 2011. The tables apply to the following issues:Tax and Revenue Certificate of Obligation, Series 2002 $ 9,925,000International Toll Bridge System Revenue Bond, Series 2002 12,105,000Waterworks System Revenue Bond, Series 2002 741,000Sewer System Revenue Bond, Series 2002 710,000Combination Tax and Sewer System Revenue Certificate of Obligation, Series 2003 3,620,000Combination Tax and Waterworks System Revenue Certificate of Obligation, Series 2003 3,510,000Combination Tax and Revenue Certificate of Obligation, Series 2004 13,535,000International Toll Bridge System Revenue Bond, Series 2004 5,935,000Waterworks & Sewer System Revenue Bonds, Series 2004 7,480,000General Obligation Refunding Bonds, Series 2005 24,455,000Sports Venue Sales Tax Revenue Improvement and Refunding Bond, Series 2005 33,550,000International Toll Bridge System Rev. Improvement and Refunding Bond, Series 2005 23,760,000International Toll Bridge System Revenue Refunding Bond, Series 2005 24,565,000Waterworks & Sewer Systems Revenue Bond, Series 2005 6,420,000Combination Tax and Revenue Certificate of Obligation, Series 2005 15,625,000General Obligation Refunding Bond, Series 2006 17,865,000Combination Tax and Revenue Certificate of Obligation, Series 2006 17,320,000Public Property Finance Contractual Obligations, Series 2006 3,680,000Waterworks & Sewer Systems Revenue Bond, Series 2006 13,485,000Waterworks & Sewer Systems Revenue Bond, Series 2007 17,670,000Combination Tax and Revenue Certificate of Obligation, Series 2007 72,480,000Combination Tax, Waterworks, and Sewer System Certificate of Obligation, Series 2008 46,235,000International Toll Bridge System Revenue Bond, Series 2008 3,070,000Tax and Revenue Certificate of Obligation, Series 2008 30,065,000Public Property Finance Contractual Obligations, Series 2008 3,555,000Waterworks & Sewer Systems Revenue Bond, Series 2008 915,000General Obligation Refunding Bond, Series 2009 27,150,000Public Property Finance Contractual Obligations, Series 2009 5,095,000Combination Tax and Revenue Certificate of Obligation, Series 2009A 11,270,000Combination Tax and Revenue Certificate of Obligation, Series 2009B (BAB) 13,465,000Waterworks & Sewer Systems Revenue Bond, Series 2009C 13,475,000Waterworks & Sewer Systems Subordinated Revenue Bond, Series 2009 7,500,000Combination Tax and Revenue Certificate of Obligation, Series 2009D (BAB) 37,945,000Public Property Finance Contractual Obligations, Series 2010 5,080,000Combination Tax and Airport Revenue Certificate of Obligation, Series 2010 4,095,000Combination Tax and Airport Refunding Certificate of Obligation, Series 2010 2,070,000Combination Tax and Airport Refunding Certificate of Obligation, Series 2010B 2,040,000General Obligation Refunding Bond, Series 2010 9,345,000Combination Tax and Revenue Certificate of Obligation, Series 2010 9,545,000Waterworks & Sewer Systems Revenue Bond, Series 2010 82,175,000Sports Venue Sales Tax Revenue Bonds, Series 2011 $ 10,445,000258

GENERAL OBLIGATION BONDSTABLE 1 - VALUATION, EXEMPTIONS AND DEBT OBLIGATIONS2010 Market Valuation Established by Webb County Appraisal District(as of September 2010) 11,398,516,794Less Exemptions/Reductions at 100% Market Value:Residential Homestead Exemptions 230,680,706Disabled Veterans Exemptions 23,737,325Agricultural and Open Space Land Use Reductions 207,094,889Free Port Exemptions 181,769,899Property Redevelopment and Tax Abatement 100,868,643Pollution Control 13,136,540Other Exemptions 3,722,656 761,010,6582010 Taxable Assessed Valuation 10,637,506,136General Obligation Debt Payable from Ad Valorem Taxes (1)General Obligation Bonds 25,154,007Certificates of Obligation 168,839,892Funded Debt Payable from Ad Valorem Taxes 193,993,899Less: Self-supporting DebtBridge System General Obligation Debt 6,077,451Airport System Certificates of Obligation 5,935,000Enviromental Services Certificates of Obligation 21,184,892Parking System General Obligation Debt 915,485Parking System Certificates of Obligation 1,115,000 35,227,828General Purpose Funded Debt Payable from Ad Valorem Taxes 158,766,071Interest and Sinking Fund 8,272,028Ratio Funded Debt to Taxable Assessed Valuation 1.82%Ratio General Purpose Funded Debt to Taxable Assessed Valuation 1.49%2010 Estimated Population- 240,135Per Capita Taxable Assessed Valuation- $44,298Per Capita Funded Debt- $808Per Capita General Purpose Funded Debt- $661(1) The above statement of indebtedness does not include the following revenue bonds, as these are payablesolely from the net revenues of the System, as defined in the bond ordinance authorizing the bonds:$176,831,654 Waterworks System Revenue Bonds; $68,797,050 Sewer System Revenue Bonds;$74,622,040 International Toll Bridge System Revenue Bonds; $8,237,066 Transit System Revenue Bonds;$16,519,366 Solid Waste Revenue Bonds; and $40,160,000 Sports Venue Sales Tax Revenue Bonds.259

TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORYTaxable Appraised Value for Fiscal Year Ended September 30,2011 2010 2009% of % of % ofCategory Amount Total Amount Total Amount TotalReal, Residential, Single Family 5,758,393,175 50.52% 5,642,149,175 49.50% 5,512,603,199 48.37%Real, Residential, Multifamily 363,783,782 3.19% 350,283,403 3.07% 334,225,503 2.93%Real, Vacant Lots/Tracts 374,194,726 3.28% 377,615,393 3.31% 397,063,450 3.48%Real, Acreage (Land Only) 364,100,202 3.19% 377,971,484 3.32% 331,543,882 2.91%Real, Farm and Ranch Improvements 2,094,360 0.02% 2,104,590 0.02% 2,539,350 0.02%Real, Commercial/Industrial 3,013,478,258 26.44% 3,005,989,286 26.37% 2,862,878,623 25.12%Real, Oil, Gas, and Other Mineral Reserves 20,194,565 0.18% 20,606,845 0.18% 33,697,085 0.30%Real and Tangible Personal, Utilities 217,971,470 1.91% 196,643,590 1.73% 230,761,250 2.02%Tangible Personal, Commercial/Industrial 1,135,466,249 9.96% 1,264,466,251 11.09% 1,210,511,686 10.62%Tangible Personal, Other 75,657,587 0.66% 75,679,927 0.66% 76,578,281 0.67%Real Property, Inventory (1) 52,822,580 0.46% 63,248,160 0.55% 39,264,150 0.34%Special Inventory 20,359,840 0.18% 20,204,920 0.18% 25,647,590 0.23%Total Appraised Value Before Exemptions 11,398,516,794 100.00% 11,396,963,024 99.99% 11,057,314,049 97.02%Less: Total Exemptions/Reductions 761,010,658 773,831,223 671,339,004Taxable Assessed Value 10,637,506,136 10,623,131,801 10,385,975,045Taxable Appraised Value for Fiscal Year Ended September 30,2008 2007% of % ofCategory Amount Total Amount TotalReal, Residential, Single Family 4,953,719,865 49.33% 4,405,051,162 48.98%Real, Residential, Multifamily 314,091,897 3.13% 284,433,947 3.16%Real, Vacant Lots/Tracts 369,653,970 3.68% 342,911,010 3.81%Real, Acreage (Land Only) 349,849,007 3.48% 293,240,703 3.26%Real, Farm and Ranch Improvements 1,404,310 0.01% 1,125,845 0.01%Real, Commercial/Industrial 2,623,142,905 26.12% 2,357,953,648 26.22%Real, Oil, Gas, and Other Mineral Reserves 27,148,765 0.27% 29,016,290 0.32%Real and Tangible Personal, Utilities 172,801,560 1.72% 165,448,100 1.84%Tangible Personal, Commercial/Industrial 1,102,980,512 10.98% 985,834,124 10.96%Tangible Personal, Other 80,523,130 0.80% 84,319,470 0.94%Real Property, Inventory (1) 18,066,770 0.18% 13,407,900 0.15%Special Inventory 27,723,990 0.24% 30,437,410 0.34%Total Appraised Value Before Exemptions 10,041,106,681 100.00% 8,993,179,609 100.00%Less: Total Exemptions/Reductions 647,577,934 585,142,683Taxable Assessed Value 9,393,528,747 8,408,036,926NOTE: Valuations shown are certified taxable assessed values reported by the Webb County Appraisal Districtto the State Controller of Public Accounts. Certified values are subject to change throughout the year ascontested values are resolved and the Appraisal District updates records.(1) Real inventory properties in the hands of developers or builders; each group of properties in this category isappraised on the basis of its value as a whole as a sale to another developer or builder.260

TABLE 3 – VALUATION AND GENERAL OBLIGATION DEBT HISTORYG.O. Ratio ofFiscal Taxable Taxable Tax Debt G.O. Tax DebtYear Estimated Assessed Assessed Outstanding to Taxable G.O. TaxEnded Population Valuations Valuation at End Assessed Debt9-30 (1) (2) Per Capita of Year Valuation Per Capita2002 201,292 4,713,792,517 23,418 153,675,000 3.26% 7632003 207,611 5,070,586,594 24,423 151,940,000 3.00% 7322004 214,000 6,018,438,664 28,124 152,500,000 2.53% 7132005 215,375 6,773,135,203 31,448 153,725,000 2.27% 7142006 224,695 7,449,143,814 33,152 155,940,000 2.09% 6942007 231,470 8,408,036,926 36,325 217,945,000 2.59% 9422008 237,396 9,393,528,747 39,569 282,840,000 3.01% 1,1912009 233,152 10,385,975,045 44,546 200,009,344 1.93% 8582010 244,580 10,623,131,801 43,434 192,761,176 1.81% 7882011 240,135 10,637,506,136 44,298 193,993,899 1.82% 808(1) Source: City of Laredo and Laredo Development Foundation.(2) As reported by the Webb County Appraisal District on City’s annual State Property Tax Board Reports.TABLE 4 – TAX RATE, LEVY AND COLLECTION HISTORYFiscalYearDistributionEnded Tax General Interest and % Current % Total9-30 Rate Fund Sinking Fund Tax Levy Collections Collections2002 0.576358 0.435878 0.140480 32,039,639 95.92% 103.11%2003 0.630534 0.484758 0.145776 33,435,345 99.97% 107.29%2004 0.641761 0.500648 0.141113 38,455,159 97.42% 105.58%2005 0.637000 0.508677 0.128323 43,209,681 96.49% 104.70%2006 0.637000 0.512019 0.124981 47,451,046 96.84% 103.73%2007 0.637000 0.513745 0.123255 53,559,195 87.31% 93.31%2008 0.637000 0.511426 0.125574 59,584,704 97.08% 103.17%2009 0.637000 0.512737 0.124263 65,642,287 96.27% 102.37%2010 0.637000 0.512772 0.124228 66,926,927 96.58% 102.05%2011 0.637000 0.512304 0.124696 67,184,974 96.52% 101.43%Tax collections as of September 30, 2011261

TABLE 5 – TEN LARGEST TAXPAYERS2010 Assessed PercentageValuation Real of TotalType of & Personal AssessedTaxpayer Business Property ValuationLaredo Texas Hospital Co., LP Medical 102,045,830 0.96%AEP Texas Central Company Electricity 58,798,630 0.55%The Geo Group, Inc. Corrections 53,004,830 0.50%Mall Del Norte, LLC Retail 52,646,610 0.49%Laredo Regional Medical Center, LP Medical 42,262,660 0.40%Electric Transmission of Texas, LLC Electricity 40,720,760 0.38%International Bank of Commerce Banking 34,635,050 0.33%Killam Ind. Dev. Partnership, Ltd. Development 31,116,490 0.29%H.E. Butt Grocery Company Grocery Store 28,807,740 0.27%Farias Development, Ltd. Development 28,035,060 0.26%472,073,660 4.44%NOTE: As of February 29, 2012, the following taxpayer is not current on their taxes: INTERNATIONAL BANK OFCOMMERCE.GENERAL OBLIGATION DEBT LIMITATION…The City held a charter election on November 7, 1995. The votersapproved Proposition 24 (2,093 in favor, 522 against), which stated that the total overall outstanding debt shall belimited to 10% of the total assessed value.262

TABLE 6 – ESTIMATED OVERLAPPING DEBTExpenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied bysuch entities on properties within the City. Such entities are independent of the City and may incur borrowings tofinance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds (“Tax Debt”)was developed from information contained in “Texas Municipal Reports” published by the Municipal Advisory Councilof Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy orcompleteness of such information, and no person should rely upon such information as being accurate or complete.Furthermore, certain of the entities may have issued additional debt since the date hereof, and such entities mayhave programs requiring the issuance of substantial amounts of additional debt, the amount of which cannot bedetermined. The following table reflects the estimated share of overlapping Tax Debt of the City.City's2010 OverlappingTaxable 2010 Total Estimated Funded DebtAssessed Tax Funded % As ofTaxing Jurisdiction Valuation Rate Debt Applicable 09-30-11City of Laredo 10,637,506,136 0.637000 193,993,899 100.00% 193,993,899Laredo Independent School District 2,208,434,168 1.274000 210,439,211 100.00% 210,439,211Laredo Community College District 10,614,922,560 0.238120 169,351,069 100.00% 169,351,069United Independent School District 10,296,645,310 1.194860 280,651,007 75.69% 212,424,747Webb County 14,187,900,118 0.420050 69,149,000 70.75% 48,922,918Total Direct and Overlapping G.O. Tax Debt 835,131,844Ratio of Direct and Overlapping G. O. Tax Debt to Taxable Assessed Valuation 1.74%Per Capita Overlapping G. O. Tax Debt 3,477.76Source: Finance Departments of respective entities.TABLE 7 – INTEREST AND SINKING FUND BUDGET PROJECTIONEstimated Debt Service Requirements, Fiscal Year Ended 9-30-2012………………………………$ 24,208,839Interest and Sinking Fund, 9-30-2011…………………………………………………… 8,272,028Property Taxes for Interest and Sinking Fund……………………………………………13,021,955Paving Assessments……………………………………………………………………… 27,998Budgeted Transfers………………………………………………………………………… 8,403,551Estimated Investment Income…………………………………………………………… 43,700 29,769,232Estimated Balance, 9-30-2012.…………………………………………………………………………$ 5,560,393263

TABLE 8A – GENERAL OBLIGATION DEBT SERVICEFiscalLess: SelfYear Total 2010 Fund Supporting % ofEnded Outstanding GO Refunding Debt GO Debt General Purpose Debt09-30 GO Debt Issue Requirements Service Requirements Funded Debt Retired2012 9,934,977 1,217,912 11,152,889 6,578,523 4,574,366 15.21%2013 10,320,000 1,456,562 11,776,562 7,029,918 4,746,6442014 8,958,289 1,455,162 10,413,451 5,652,411 4,761,0402015 4,849,211 923,825 5,773,036 2,200,561 3,572,4752016 4,669,450 918,800 5,588,250 2,228,316 3,359,9342017 4,736,951 925,913 5,662,864 2,229,855 3,433,009 81.27%2018 3,531,200 924,913 4,456,113 1,794,862 2,661,2512019 1,460,199 922,713 2,382,912 1,359,544 1,023,3682020 1,149,696 924,213 2,073,909 1,042,485 1,031,4242021 771,453 745,656 1,517,109 672,907 844,2022022 - 744,600 744,600 671,376 73,224 100.00%Total 50,381,426 11,160,269 61,541,695 31,460,758 30,080,937264

TABLE 8B – CERTIFICATES OF OBLIGATION DEBT SERVICELess: SelfSupporting GeneralOutstanding Certificate of Fund CO Debt PurposeFiscal Year Certificates of Oblig, Series Debt Service Funded % of Debt9-30 Obligation Debt 2010A Requirements Requirements Debt Retired2012 24,668,660 329,656 24,998,316 9,965,836 15,032,480 6.10%2013 24,563,933 327,650 24,891,583 9,792,117 15,099,4662014 25,132,559 325,406 25,457,965 9,804,858 15,653,107 18.57%2015 24,527,730 327,806 24,855,536 9,798,243 15,057,2932016 24,532,296 324,850 24,857,146 9,803,678 15,053,4682017 24,526,059 326,538 24,852,597 9,807,889 15,044,7082018 24,538,695 327,750 24,866,445 9,812,689 15,053,7562019 23,946,665 328,488 24,275,153 9,146,861 15,128,292 49.12%2020 23,956,209 328,750 24,284,959 9,149,679 15,135,2802021 23,577,609 328,537 23,906,146 8,777,649 15,128,4972022 23,546,237 327,850 23,874,087 8,758,466 15,115,6212023 23,092,329 326,687 23,419,016 8,335,919 15,083,0972024 22,472,419 325,050 22,797,469 8,024,026 14,773,443 79.63%2025 21,816,741 327,819 22,144,560 7,512,060 14,632,5002026 20,535,934 324,994 20,860,928 7,475,189 13,385,7392027 19,138,873 326,575 19,465,448 7,431,808 12,033,6402028 12,530,803 327,444 12,858,247 6,822,126 6,036,1212029 9,843,622 327,600 10,171,222 6,775,441 3,395,781 99.70%2030 7,466,177 - 7,466,177 6,731,177 735,0002031 6,679,706 - 6,679,706 6,679,706 -2032 6,635,327 - 6,635,327 6,635,327 -2033 6,582,334 - 6,582,334 6,582,334 -2034 3,361,440 - 3,361,440 3,361,440 - 100.00%2035 3,306,065 - 3,306,065 3,306,065 -2036 3,243,796 - 3,243,796 3,243,796 -2037 3,184,304 - 3,184,304 3,184,304 -2038 3,122,098 - 3,122,098 3,122,098 -2039 3,052,012 - 3,052,012 3,052,012 - 100.00%Total 443,580,632 5,889,450 449,470,082 202,892,793 246,577,289265

TABLE 9 – COMPUTATION OF SELF-SUPPORTING DEBTComputation of Self-supporting Debt-AirportNet Airport Revenue from Fiscal Year Ended 9-30-11 (60,160)Less: Airport Revenue Bond Requirements, 2012 Fiscal Year Ended 500,537Balance Available for Other Purposes (560,697)Airport General Obligation Bond Requirements, 2012 Fiscal Year Ended -Balance (560,697)Percentage of Airport General Obligation Bonds Self-supporting 0%Computation of Self-supporting Debt-Sewer SystemNet Revenue from Fiscal Year Ended 9-30-11 4,488,623Less: Sewer System Revenue Bond Requirements, 2012 Fiscal Year Ended 2,953,840Balance Available for Other Purposes 1,534,783Sewer System General Obligation Bond Requirements, 2012 Fiscal Year Ended 2,524,434Balance (989,651)Percentage of Sewer System General Obligation Bonds Self-supporting 100%Computation of Self-supporting Debt-Waterworks SystemNet Revenues from Fiscal Year Ended 9-30-11 (1,073,043)Less: Waterworks Revenue Bond Requirements, 2012 Fiscal Year Ended 4,721,384Balance Available for Other Purposes (5,794,427)Waterworks System General Obligation Bond Requirements, 2012 Fiscal Year Ended 3,413,992Balance Available for Other Purposes (9,208,419)Percentage of Waterworks System General Obligation Bonds Self-supporting 100%Computation of Self-supporting Debt-Mass TransitNet Revenue from Fiscal Year Ended 9-30-11 (448,926)Less: Mass Transit Revenue Bond Requirements, 2012 Fiscal Year Ended 827,187Balance Available for Other Purposes (1,276,113)Mass Transit General Obligation Bond Requirements, 2012 Fiscal Year Ended 443,600Balance (1,719,713)Percentage of Mass Transit General Obligation Bonds Self -supporting 100%266

TABLE 9 – COMPUTATION OF SELF-SUPPORTING DEBT (CONTINUED)Computation of Self-supporting Debt-Solid Waste Fund (Landfill Fund)Net Revenue from Fiscal Year Ended 9-30-11 1,163,550Less: Solid Waste Revenue Bond Requirements, 2012 Fiscal Year Ended 1,319,906Balance Available for Other Purposes (156,356)Solid Waste General Obligation Bond Requirements, 2012 Fiscal Year Ended 196,502Balance (352,858)Percentage of Solid Waste General Obligation Bonds Self-supporting 100%TABLE 10 - OTHER OBLIGATIONSFiscal Year Ended September 30Lease Payments2012 522,7562013 522,7562014 214,956Total Minimum Lease Payments 1,260,468Pension ObligationThe City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement System(TMRS), a statewide administered pension plan. The City makes annual contributions to the plan equal to theamounts accrued for pension expense.267

FINANCIAL INFORMATIONTABLE 11 - GENERAL FUND REVENUES AND EXPENDITURES HISTORYFiscal Year Ended September 30,2011 2010 2009 2008 2007Revenues:Taxes 82,825,288 79,720,751 79,205,602 76,258,746 70,690,523Franchises 6,995,838 6,668,731 6,788,837 6,793,268 6,506,014Licenses & Permits 5,795,171 5,833,700 5,804,115 5,423,364 6,148,720Intergovernmental 1,629,571 1,581,037 506,126 880,661 1,351,157Charges for Services 32,061,368 32,533,435 30,572,648 32,406,865 28,275,249Fine and Special Assessment 3,248,911 3,230,565 2,819,186 3,006,348 2,629,702Interest and Other 931,281 921,017 1,568,003 1,758,899 1,889,840Other 1,687,095 1,390,982 1,578,719 1,990,745 1,750,572Total Revenues 135,174,523 131,880,218 128,843,236 128,518,896 119,241,777Expenditures:General Government 18,295,821 17,864,806 17,603,178 16,708,796 16,548,260Public Safety 92,803,746 89,777,961 86,642,904 84,875,344 75,891,973Public Works 7,049,101 6,838,476 6,603,736 7,261,913 7,465,068Health and Welfare 839,064 870,349 958,764 920,952 560,866Culture and Recreation 11,139,218 10,499,519 10,162,597 11,114,135 10,551,572Capital Outlay 11,291,552 18,458,452 9,539,344 114,517 -Total Expenditures 141,418,502 144,309,563 131,510,523 120,995,657 111,017,739Excess (Deficiency) of RevenuesOver Expenditures (6,243,979) (12,429,345) (2,667,287) 7,523,239 8,224,038Transfers In 6,681,267 2,608,800 1,969,695 12,685 733,997Bond/Capital Lease Proceeds - 2,070,000 - 46,235,000 144,235Captial Lease Payments - - (102,232) (102,232) (400,000)Bond Costs - (70,000) - (766,853) -Bond Premium - - - 772,484 -Transfers Out (9,738,939) (5,326,814) (4,527,830) (3,885,302) (6,836,898)Contributions 9,749,327 17,394,912 9,340,787 (46,471,173) -Sale of Assets 126,432 6,356 58,685 155,843 192,338Total Transfers In/(Out) 6,818,087 16,683,254 6,739,105 (4,049,548) (6,166,328)Net Increase (Decrease) 574,108 4,253,909 4,071,818 3,473,691 2,057,710Beginning Fund Balance 34,946,332 30,692,423 26,620,605 23,146,914 21,089,204Ending Fund Balance 35,520,440 34,946,332 30,692,423 26,620,605 23,146,914268

TABLE 12 – MUNICIPAL SALES TAX HISTORYThe City has adopted the Municipal Sales and Use Tax Act, VATCS, Tax Code Chapter 321, which grants the Citythe power to impose and levy a 1% Local Sales Tax within the City proceeds of which are credited to the GeneralFund and are not pledged to the payment of the Certificates. Collections and enforcement are effected through theoffices of the Comptroller of Public Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a2% service fee, to the City monthly.% of Ad Equivalent ofFiscal Year Valorem Tax Ad Valorem Per CapitaEnded 9-30 Total Collected (2) Levy Tax Rate (1)2002 21,447,813 67% 0.3858 106.552003 22,547,235 67% 0.4252 108.602004 24,374,768 63% 0.4050 113.902005 26,433,198 61% 0.3902 122.732006 29,894,463 63% 0.4013 133.042007 31,384,048 59% 0.3733 135.592008 32,518,723 55% 0.3476 136.982009 30,308,403 46% 0.2941 129.992010 29,339,115 44% 0.2792 119.962011 33,669,024 50% 0.3192 140.21(1) Based on estimated population for all years.(2) The City has also collected a 1/4 of 1% Local Sales and Use Tax since September, 1991 for funding of itsMass Transit System and a 1/4 of 1% since January 2001 for the Sports & Community Venue Project. Thetotal collected column includes only amount collected for the City and Sports & Community Venue.The sales tax breakdown for the City is as follows:Webb County 0.50%Mass Transit Sales & Use Tax 0.25%Sports Venue Tax 0.25%City Sales & Use Tax 1.00%State Sales & Use Tax 6.25%Total 8.25%TABLE 13 - CURRENT INVESTMENTSAs of September 30, 2011, all of the City’s investments consisted of secured certificates of deposits and governmentinvestment pools. The City’s certificate of deposit portfolio had a weighted average maturity of 185 days to its finalmaturity. The City’s funds are invested as follows:Investment Pools $ 110,099,928Certificates of Deposit 292,514,953Total $ 402,614,881269

LAREDO BRIDGE SYSTEMThe system presently consists of the Gateway to the Americas Bridge (Bridge No. 1),the Juarez/Lincoln International Bridge (Bridge No. 2), the Columbia Solidarity Bridge(Bridge No. 3), and the World Trade Bridge (Bridge No. 4). Bridge No. 1 was built in1956 and was enlarged to a 40-foot width. It has four vehicular traffic lanes with 8-footcovered pedestrian sidewalks on each side and aluminum outside railings. Bridge No.2 was built in 1976. Total width of Bridge No. 2 is 98.4 feet and accommodates up toeight vehicular traffic lanes with a sidewalk and includes protective barriers and highcurbs to separate the sidewalk from the roadway. Bridge No. 3 was built in 1991. Thisbridge structure is a simple plan structure consisting of six 12’ wide vehicular lanes.Bridge No. 4 was built in 2000 and has eight vehicle lanes.The system presently has 25 toll lanes, all of which are equipped with an automated tollcollection system which counts truck axles and charges accordingly. The toll collectionprocess was recently restructured and upgraded to include a weight-in-motion systemfor truck toll collections for the Laredo Bridge System. The bridge system employs astaff of 207 employees, approximately 78 of which are directly involved in toll collectionoperations. Another 129 employees are involved in various aspects of administration,including maintenance, toll technicians, accounting, customer service, traffic control,and general administration.TABLE 1 - ANALYSIS OF SYSTEM TRAFFICLAREDO BRIDGE SYSTEMCURRENT AND HISTORICAL INFORMATIONNON-CALENDAR COMMERCIAL COMMERCIAL TOTALYEAR VEHICLES VEHICLES VEHICLES PEDESTRIANS2001 7,744,421 1,398,064 9,142,485 4,281,3132002 7,023,501 1,454,517 8,478,018 4,101,2082003 7,020,005 1,397,421 8,417,426 4,028,2992004 7,025,709 1,453,807 8,479,516 4,133,1702005 6,655,426 1,485,435 8,140,861 3,993,2632006 6,056,829 1,704,727 7,761,556 4,148,3592007 5,718,799 1,662,549 7,381,348 4,161,5232008 5,539,281 1,608,566 7,147,847 4,362,4762009 5,045,664 1,400,969 6,446,633 4,124,2722010 4,669,024 1,575,893 6,244,917 3,746,1702011 4,401,849 1,725,335 6,127,184 3,161,627270

TABLE 2 - TOLL RATES FOR THE SYSTEMNew Rate Schedule (Southbound only) EffectiveOctober 24, 2008:Pedestrians $0.75Children under 6 years of ageFreeBicycle and Rider $0.75All non-commercial vehicles not utilizing the $1.50Automated Vehicle Identification System (AVI) orColombia Solidarity Bridge (per axle)Emergency vehicles, fire engines, ambulances, Freepolice cars, etc., answering or returning from anemergency callAll non-commercial vehicles utilizing the AVI or $1.40Colombia Solidarity Bridge (per axle)Commercial Vehicles (per axle) $3.75Swipe Card Administrative Fee (per card) $1.00Sticker Tag Cost $15.00Old Rate Schedule (Southbound only) EffectiveApril 25, 2008:Pedestrians $0.50Children under 6 years of ageFreeBicycle and Rider $0.50All non-commercial vehicles not utilizing the $1.50Automated Vehicle Identification System (AVI) orColombia Solidarity Bridge (per axle)Emergency vehicles, fire engines, ambulances, Freepolice cars, etc., answering or returning from anemergency callAll non-commercial vehicles utilizing the AVI or $1.40Colombia Solidarity Bridge (per axle)Commercial Vehicles (per axle) $3.75Swipe Card Administrative Fee (per card) $1.00Sticker Tag Cost $15.00271

TABLE 3 - HISTORICAL REVENUES OF THE SYSTEMFISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEARMONTH 2011 2010 2009 2008 2007OCT 3,627,234 3,638,421 3,672,960 3,931,482 3,260,281NOV 3,591,235 3,490,378 3,432,820 3,853,868 3,294,600DEC 3,788,623 3,832,483 3,748,609 3,985,808 3,420,517JAN 3,454,475 3,322,648 3,118,442 3,658,372 2,960,412FEB 3,373,217 3,252,861 3,105,349 3,669,850 2,904,326MAR 3,790,362 3,751,600 3,391,086 3,745,655 3,289,547APR 3,702,584 3,583,838 3,322,093 3,817,597 3,076,696MAY 3,712,938 3,632,644 3,242,775 3,792,909 3,209,794JUN 3,775,125 3,685,688 3,328,502 3,794,493 3,244,151JUL 3,518,264 3,327,520 3,514,620 3,866,801 3,161,768AUG 3,720,401 3,705,904 3,465,722 3,750,195 3,251,761SEP 3,583,744 3,596,149 3,473,276 3,709,228 2,977,709TOTAL 43,638,202 42,820,134 40,816,254 45,576,258 38,051,562272

TABLE 4 - DEBT SERVICE REQUIREMENTS OF THE SYSTEM% ofFiscalTotalYear Total DebtEnded BondSIB Loan Outstanding Service9-30 Principal Interest Total Total Debt Retired2012 4,390,000 2,679,132 7,069,132 1,697,709 8,766,841 8.76%2013 4,605,000 2,499,951 7,104,951 1,697,708 8,802,6592014 4,815,000 2,284,965 7,099,965 1,697,709 8,797,6742015 5,055,000 2,062,228 7,117,228 1,697,708 8,814,9362016 5,310,000 1,811,790 7,121,790 1,697,708 8,819,498 43.94%2017 5,585,000 1,547,941 7,132,941 1,697,708 8,830,6492018 5,870,000 1,269,742 7,139,742 1,697,708 8,837,4502019 3,270,000 976,544 4,246,544 1,697,708 5,944,2522020 2,770,000 818,398 3,588,398 1,697,709 5,286,1072021 2,905,000 678,132 3,583,132 1,697,708 5,280,840 78.08%2022 3,055,000 530,161 3,585,161 1,697,708 5,282,8692023 2,285,000 373,618 2,658,618 1,697,708 4,356,3262024 2,400,000 255,306 2,655,306 1,697,708 4,353,0142025 2,010,000 131,006 2,141,006 1,697,708 3,838,7142026 210,000 31,086 241,086 1,697,708 1,938,794 97.82%2027 220,000 21,195 241,195 1,697,666 1,938,8612028 230,000 10,833 240,833 - 240,833 100.00%TOTAL 54,985,000 17,982,028 72,967,028 27,163,289 100,130,317273

TABLE 5 – INTERNATIONAL TOLL BRIDGE SYSTEM CONDENSED STATEMENT OF OPERATIONS2011 2010 2009 2008 2007REVENUESToll Receipts 43,638,202 42,820,134 40,816,254 45,576,258 38,051,562Rental of Facilities 2,734,637 2,700,169 2,417,709 2,182,015 2,120,862Miscellaneous 59,631 377,044 29,871 61,891 14,811Total 46,432,470 45,897,347 43,263,834 47,820,164 40,187,235EXPENSESPersonnel Services 7,451,573 6,950,196 7,759,920 7,646,420 7,474,294Materials and Supplies 566,377 494,239 403,344 749,864 677,734Contractual Services (1) 3,558,081 3,867,475 3,316,797 3,589,207 3,250,608Other 1,300 53,793 19,149 17,660 23,930Total 11,577,331 11,365,703 11,499,210 12,003,151 11,426,566NON-OPERATING REVENUEInterest Earnings-Restricted 55,901 163,246 103,219 762,427 1,114,714Interest Earnings-Unrestricted 23,032 37,064 369,021 204,796 259,386Unrealized Gain/(Loss)on Investments - - (11,939) (30,307) 81,636Net Revenues Available forfor Debt Service 34,934,072 34,731,954 32,224,925 36,753,929 30,216,405Debt Service 8,784,606 8,787,530 8,322,360 8,144,751 8,253,670Surplus Revenues 26,149,466 25,944,424 23,902,565 28,609,178 21,962,735(1) Contractual Services consist of administrative overhead and monthly payments made to the City forservices provided to the System from surplus revenues of the System.274

TABLE 6 – COVERAGE AND FUND BALANCESDEBT SERVICE COVERAGE-FIRST LIEN REVENUE BONDSAverage Annual Principal and Interest Requirements on SystemRevenue Bonds, 2012 through 2028 $ 4,292,178Coverage of Average Requirements by 9-30-11 Net Income 6.09Maximum Annual Principal and Interest Requirements,after FYE 2012 through 2028 $ 7,139,742Coverage of Maximum Requirements by 9-30-11 Net Income 3.66Reserve Fund $ 4,292,178Contingency Fund $ 500,000DEBT SERVICE COVERAGE-FIRST LIEN REVENUE BONDSAND SIB LOANAverage Annual Principal and Interest Requirements on First LienRevenue Bonds plus SIB Loan, 2012 through 2028 $ 5,890,019Coverage of Average Requirements by 9-30-11 Net Income 4.44Maximum Annual Principal and Interest Requirements,after FYE 2012 through 2028 $ 8,837,450Coverage of Maximum Requirements by 9-30-10 Net Income 2.96TABLE 7 – HISTORICAL DEBT SERVICE COVERAGE ANALYSISNetOperating Revenue Totaland Non- Direct Available DebtFiscal Operating Operating For Debt ServiceYear Revenues Expenses(1) Service Requirements Coverage2002 34,408,912 8,413,669 25,995,243 7,222,409 42003 34,836,756 8,728,556 26,108,200 6,878,415 42004 35,574,197 9,210,546 26,363,651 6,796,347 42005 39,231,949 10,020,392 29,211,557 9,521,805 32006 42,757,164 10,851,262 31,905,902 8,348,905 42007 41,642,971 11,426,566 30,216,405 8,253,670 42008 48,757,080 12,003,151 36,753,929 8,144,751 52009 43,724,135 11,499,210 32,224,925 8,322,360 42010 46,097,657 11,365,703 34,731,954 8,787,530 42011 46,511,403 11,577,331 34,934,072 8,784,606 4(1) Operating expenses do not include depreciation expense and non-operating expenses.275

LAREDO INTERNATIONAL AIRPORT DISCLOSURESThe City of Laredo International Airport encompasses approximately 1,892 acres of which 900 acres arededicated to aviation for passenger and air cargo terminals, runways, taxiways and aprons, and 982 acresare dedicated for industrial, commercial, retail, institutional, and recreational.The Airport is currently being served by the following scheduled airlines: American Airlines to Dallas/FortWorth, United Express to Houston Bush Intercontinental and Allegiant Air to Las Vegas, Nevada andOrlando, Florida. On average, the airlines have in total nine (9) daily scheduled round trip flights. A toppriority for the Airport is the re-instatement of direct air service to Mexico City and Guadalajara, Mexico.Furthermore, our passenger terminal also houses a full service restaurant, gift shop & duty freeconcession, ATM, five car rental companies, Federal Inspection Facility with 24/7 services, andTransportation Security Administration.In the area of commercial passenger enplanement activity for 2011 decreased by 9.69% compared to2010. Allegiant Air has added additional summer time flights including new scheduled flight service toOrlando, Florida and this will boost passenger activity. Allegiant Air operates the 150-passenger MD-80mainline jet aircraftThe airport passenger terminal is master planned to expand from the original three gates with fourpassenger-boarding bridges to twenty gates by the year 2025. The passenger capacity for the terminal is600 passengers per hour and the Federal Inspection Station has capacity for 300 passengers per hour.Three (3) scheduled cargo operators and fifteen (25) charter air cargo companies are currently serving theAirport. Major air cargo operators at the Laredo International Airport include: Federal Express, UPSSupply Chain Solutions, Air Transport Inc., Kallita Charters, USA Jet, AmeriJet, USA/TSM, Cherry Air,AmeriStar, IFL Group, Air Cargo Carriers, Inc., National Air Cargo, Northern Air Cargo, Lynden Air, andContract Air. Cargo increased during 2011 by approximately 9.37% as a result of the improved globaleconomy primarily the automotive sector which sector accounts for approximately 90 percent of Laredo’sair cargo.During June 2007 the Federal Aviation Administration’s approved Laredo’s Airport Noise CompatibilityUpdate Study. A significant number of residents became eligible to participate in the City’s voluntary noiseabatement program. This program consists of the following options:• Offer to acquire the fee simple interest, or• Offer to soundproof, if feasible, the residential structure in exchange for an avigation easement, or• Offer to acquire the avigation easement.The estimated cost of the airport noise abatement program for the next eight to ten years is $48.0 millionof which the Federal Aviation Administration, under the current program, would fund 95% of the programcost.Projects completed during 2011 included the Extension of Runway 17R, Rehabilitate GA Apron Phase 5,Airport Wildlife Hazardous Study, installation & upgrade of Airport Security Access System, architectural /engineering work of a Federal Inspection Facility. The Federal Aviation Administration paid 95% of thecost.Projects for 2012 include construct a Federal Inspection Facility, Airport Geographic Information System“AGIS” Survey, FAR Part 150 Airport Noise Contour Update Study, Rehabilitate GA Apron Phase 6realignment of a portion of Taxiway F, construction for realignment of a portion of Taxiway F & J,rehabilitation and upgrade of EMAS, construction of Airport Rescue and Fire Fighting Station, MexicanCustoms, Application to the Foreign Trade Zone’s Board of the Alternative Site Framework “ASF”, andFAA Contract Tower 24/7 Services.276

During the past eighteen (18) years, the City and the Federal Aviation Administration have invested over$185 million in Laredo International Airport infrastructure including noise abatement. This trend weanticipate will continue in 2012 and into the future.The airport leases facilities and land to non-aviation and aviation service providers, retailers, medicalinstitutions, and public entities. New leases in 2011 included aeronautical land lease agreements withUni-Trade and Air Trade Laredo for construction of new cargo warehouse facilities along the GA ApronWest Side.The goal of City Council to develop a Regional Medical Center on airport non-aeronautical use land isbeing realized. The University of Texas Health Science Center (UTHSC) inaugurated the first building ofits medical research and education campus in Laredo in 2002, and the second building was completed in2007. UTHSC is located adjacent to Mercy Regional Medical Center. During 2006, Laredo SpecialtyHospital and Gateway Health Clinic completed the construction of their facilities and are currently offeringmedical services to the public. Forthcoming is a new Veteran’s Administration Clinic partnered with the UTHealth and Science Center.CalendarYearAir CargoGross LandedWeight (lbs.)PassengersEnplanedPassengersDeplaned1998 78,223 75,135 460,763,8191999 89,306 87,017 374,202,3032000 89,905 87,807 420,000,000(1)2001 69,049 67,835 226,136,7802002 74,286 73,719 261,473,8202003 73,638 72,345 272,367,9592004 81,342 81,924 366,161,4252005 90,653 92,932 374,434,5762006 92,783 93,979 360,000,0002007 113,004 111,464 341,198,304(2)2008 107,553 109,912 272,960,0002009 102,065 105,107 265,480,642(3)2010 110,615 113,219 419,323,8142011 99,893 98,213 458,595,636_________(1) Because of the terrorist attacks of September 11, 2001, the airport experienced an 8.0 percent declinein passenger activity for CY 2001. As a result of a weak national economy during all of CY 2001, aircargo declined by approximately 46 percent.(2) Global economic conditions during 2008 negatively affected both passenger and cargo activity.(3) An improved global economy is reason for the significant increase in both passenger and air cargoactivity.277

TABLE 1- SUMMARY OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEFiscal Years Ended September 30,2011 2010 2009 2008 2007 2006 2005 2004Revenues:FAA $ 69,880 $ - $ - $ - $ 388,321 $ 391,895 $ 349,076 $ 287,124State Operating Grants 2,924 106,939 109,807 82,190 100,235 102,045 98,363 94,710Rents 4,129,984 5,002,207 4,281,154 4,448,507 4,399,983 3,844,104 3,525,829 3,489,304Interest Earnings 2,775 2,354 55 (59) 9,019 47,672 87,095 34,837Discount Earnings - - - - 28Proceeds from Asset Disposition - - - - - - 329,689 3,898,840Miscellaneous 456,453 514,497 343,539 370,831 404,714 202,542 325,174 251,881Total Revenues 4,662,016 5,625,997 4,734,555 4,901,469 5,302,300 4,588,258 4,715,226 8,056,696Expenditures:Administration 2,460,491 2,530,733 2,433,606 2,192,701 2,318,266 2,389,787 2,686,745 3,655,870Building Maintenance 723,818 638,191 618,010 568,963 654,188 389,809 427,045 370,364Ground Maintenance 409,318 340,024 385,009 379,262 454,977 436,528 498,610 418,625Control Tower - - - - 684,924 491,684 461,614 392,096Airport Police 1,034,819 910,926 861,261 950,347 1,033,311 766,494 584,732 586,887Foreign Trade Zone 23,239 19,151 19,900 18,540 14,952 14,552 14,558 13,769Total Expenditures 4,651,685 4,439,025 4,317,786 4,109,813 5,160,618 4,488,854 4,673,304 5,437,611Net Operating Revenues 10,331 1,186,972 416,769 791,656 141,682 99,404 41,922 2,619,085Other Sources (Uses):Debt Service (495,697) (542,210) (729,105) (734,444) (407,640) (645,942) (786,131) (790,914)Capital Outlay (70,491) (81,556) - (35,361) (302,285) (1,872,588) (115,980) -Airport Construction Fund (47,286) (49,993) (49,887) (50,000) - - - -Communication System Fund - - - - (270,000) (81,411) - -General Fund - - - - - - - 25,000Noise Abatement - 403,071 649,682 89,431 - - - (315,790)New Airport Terminal - - - - 306,641 316,373 (1,500,000) (511,889)Sale of Assets 18,314 - 1,518 1,496 4,800 - - -Total Other Sources (Uses) (595,160) (270,688) (127,792) (728,878) (668,484) (2,283,568) (2,402,111) (1,593,593)Excess (Deficiency) ofRevenues Over Expenditures (584,829) 916,284 288,977 62,778 (526,802) (2,184,164) (2,360,189) 1,025,492Beginning Fund Balance 753,531 (162,753) (451,730) (514,508) 12,294 2,131,789 4,491,978 3,466,486Prior Period Adjustment - - - - - 64,669 - -Ending Fund Balance $ 168,702 $ 753,531 $ (162,753) $ (451,730) $ (514,508) $ 12,294 $ 2,131,789 $ 4,491,978278

TABLE 2 - DEBT SERVICE REQUIREMENTFiscalYear Total % ofEnded Debt Outstanding Principal9-30 Requirement Principal Interest Total Debt Retired2012 $ 170,880 145,000 184,656 329,656 500,536 5.61%2013 167,240 150,000 177,650 327,650 494,8902014 168,470 155,000 170,406 325,406 493,8762015 169,440 165,000 162,806 327,806 497,2462016 170,150 170,000 154,850 324,850 495,0002017 170,600 180,000 146,538 326,538 497,138 33.36%2018 170,790 190,000 137,750 327,750 498,5402019 165,850 200,000 128,488 328,488 494,3382020 165,780 210,000 118,750 328,750 494,5302021 170,320 220,000 108,537 328,537 498,8572022 169,470 230,000 97,850 327,850 497,3202023 168,360 240,000 86,687 326,687 495,047 66.71%2024 166,990 250,000 75,050 325,050 492,0402025 170,230 265,000 62,819 327,819 498,0492026 168,080 275,000 49,994 324,994 493,0742027 170,540 290,000 36,575 326,575 497,1152028 167,610 305,000 22,444 327,444 495,0542029 169,290 320,000 7,600 327,600 496,890 100.00%$ 3,040,090 3,960,000 1,929,450 5,889,450 8,929,540TABLE 3 - DEBT SERVICE COVERAGEAverage Annual Principal and Interest Requirements, 2012-2029 $ 496,086Coverage of Average Requirements by 9-30-11 Net Income 0.02Maximum Annual Principal and Interest Requirements, afterFYE 2012 through 2029 $ 498,857Coverage of Maximum Requirements by 9-30-11 Net Income 0.02279

WATER SUPPLYTHE UTILITY SYSTEMThe City of Laredo uses surface water from the Rio Grande as its source of raw water.Water is diverted directly from the river to the immediately adjacent water treatment plantfacilities by two separate river intakes, two separate river pump structures and relatedmultiple pump units. The City of Laredo’s water allotment is approximately 59,366 acre-feetof water rights.The first “modern” design rapid sand filter plant for the City of Laredo was constructed in theyears 1928-1929. The original plant was constructed on a land elevation of 400 feet and hasbeen periodically shut down due to high levels of flood waters from the river. Due to thisflooding experience, it was decided by the Waterworks Board to purchase sufficient landimmediately East of the original plant site to construct a new plant. The acquired land hasan elevation of 420 feet, which is above any historically recorded flood level of the RioGrande at this location. This second plant has a capacity of one million gallons per day.The combined pumpage capacity of the City’s Upper and Lower Treatment Plants is 65million gallons per day. The average daily demand during 2011 was approximately 32.4million gallons per day and peak demand for 2011 was 44.7 million gallons per day.Connections to the water system as of September 30, 2011 were 62,195.WASTEWATER SYSTEMThe City of Laredo owns and operates six wastewater treatment plants, which have acombined total design capacity of 24.713 million gallons per day ("MGD"). The SewerSystem includes approximately 519 miles of sewer lines and 71 lift stations. The averagedaily treatment is 18.78 MGD with 58,726 connections as of September 30, 2011.280

TABLE 1 - WATER STORAGE AND DISTRIBUTIONAt the present time the system incorporates the following treated water storage facilities:LocationNo.TanksNo.Clear Wells Storage Capacity"Old" Water Treatment Plant 1 1,000,000 gallons"New" Water Treatment Plant 1 2,500,000 gallonsHendricks Avenue and Main Street 2 4,000,000 gallonsLyon Street and Meadow Avenue 2 11,000,000 gallonsTexas Street and Milmo 2 3,000,000 gallonsAirbase Storage 1 (elevated) 500,000 gallonsStation H (#2) 1 170,000 gallonsEast Corridor 1 250,000 gallonsLarga Vista 1 33,000 gallonsUnitec Highway 35 North 2 170,000 gallonsSouth Laredo 1 (elevated) 1,000,000 gallonsNorth Laredo (Highland) 1 (elevated) 1,000,000 gallonsNorthwest Laredo 1 (elevated) 1,000,000 gallonsMHOC 2 10,000,000 gallonsSierra Vista 1 5,000,000 gallonsUnion Pacific 1 88,000 gallonsHachar 1 280,000 gallonsSan IsidroSan Isidro NE21590,000 gallons311,000 gallonsMillennium 1 280,000 gallonsHwy 359 1 211,000 gallonsLas Blancas 1 (elevated) 500,000 gallonsPico Road 1 278,000 gallonsKillam (TAMIU) TankCuatro VientosNixon1 (elevated)1 (elevated)1 (elevated)2,000,000 gallons2,000,000 gallons3,000,000 gallonsTotal Treated Water Storage50,161,000 gallonsIn conjunction with the existing storage, automatic booster or pumping stations serve thesystem. These stations are located at the tanks listed above. Two pumping stations areserved by two clear wells. Currently, the system consists of approximately 708 miles oftransmission and distribution lines.In 1957, the City of Laredo entered into an agreement with Webb County to use Lake CasaBlanca Reservoir as off-channel storage for emergency use. This reservoir has animpoundment capacity of 77,800 acre feet at top of the Dam, 58,600 acre feet at maximumpool, (PMF – Probable Maximum Feet) of which 20,000 acre feet are reserved foremergency use. This agreement is still in effect.281

TABLE 2 - WATER PUMPAGE (THOUSAND GALLONS)Historical water usage for the City is as follows:FiscalYearEnded9/30Average DayPumpage(1,000Gallons)Peak DayPumpage(1,000 Gallons)TotalYearlyPumpage(1,000 Gallons)2002 37,254 61,120 13,654,3102003 31,288 59,754 11,420,2322004 32,231 50,231 11,764,3152005 34,675 55,034 12,820,8652006 40,918 58,940 14,086,7612007 33,550 49,000 12,245,3292008 36,720 53,640 13,345,8122009 35,900 51,810 13,047,5942010 32,565 47,470 11,900,1962011 32,600 47,470 11,726,000TABLE 3 - SEWAGE FLOW (THOUSAND GALLONS)FiscalYearEnded9-30DailyAverageSewageFlow(1,000Gallons)TotalYearlyFlow(1,000 Gallons)2002 15,435,000 5,634,6552003 16,767,000 6,120,0272004 17,015,000 6,210,5202005 16,776,000 6,123,1862006 16,796,000 6,130,4092007 18,215,000 6,648,5352008 17,948,000 6,551,0822009 17,572,000 6,413,6312010 18,256,000 6,663,3682011 18,783,000 6,855,795282

TABLE 4 - TEN LARGEST WATER/SEWER USERS (GALLONS) (1)TYPE OF BUSINESS CONSUMPTION (1)Laredo Medical Center 142,255,100Texas A&M InternationalUniversity 81,455,400Laredo Community College 43,159,500United High School 32,806,200Laredo Municipal Housing Corp. 31,427,500New Webb County Jail 22,542,900Laredo Regional Medical Center 21,576,900La Bota Ranch Owner Association 16,452,500Towne North Mobile Homes 14,606,300Winfield Community Association 12,434,200__________________(1) Source: City of Laredo, Texas.283

TABLE 5 - MONTHLY WATER RATESWater Rates(Effective January 1, 2011)Inside City LimitsResidential:Monthly minimum, including use of 2,000 gallons per month 7.50Per 1,000 gallons (for the next 2,000 gallons) per month in excessof 2,000 gallons per month 1.45Per 1,000 gallons (for the next 6,000 gallons) per month in excess of4,000 gallons per month 1.55Per 1,000 gallons (for the next 10,000 gallons) per month in excess of10,000 gallons per month 1.62Per 1,000 gallons (for the next 10,000 gallons) per month in excess of20,000 gallons per month 1.72Per 1,000 gallons (for the next 10,000 gallons) per month in excess of30,000 gallons per month 1.82Per 1,000 gallons (for the next 10,000 gallons) per month in excess of40,000 gallons per month 1.90Per 1,000 gallons per month in excess of 50,000 gallons per month 3.80Multi-Family and Commercial:Monthly minimum, including use of 2,000 gallons per month 28.11Per 1,000 gallons (for the next 2,000 gallons) per month in excess of2,000 gallons per month 1.55Per 1,000 gallons (for the next 6,000 gallons) per month in excess of4,000 gallons per month 1.58Per 1,000 gallons (for the next 30,000 gallons) per month in excessof 10,000 gallons per month 1.84Per 1,000 gallons (for the next 110,000 gallons) per month in excess of40,000 gallons per month 2.10Per 1,000 gallons (for the next 150,000 gallons) per month in excessof 150,000 gallons per month 2.37Per 1,000 gallons (for the next 300,000 gallons) per month in excessof 300,000 gallons per month 2.90Per 1,000 gallons (for the next 400,000 gallons) per month in excessof 600,000 gallons per month 3.59Per 1,000 gallons per month in excess of 1,000,000 gallons per month 3.68Outside City Limits:The rates for water outside the City limits shall be two times thoseestablished for commercial rates.284

TABLE 5 - MONTHLY WATER RATES (CONTINUED)Old Rates(Effective January 1, 2010)Inside City LimitsResidential:Monthly minimum, including use of 2,000 gallons per month 7.50Per 1,000 gallons (for the next 2,000 gallons) per month in excessof 2,000 gallons per month 1.38Per 1,000 gallons (for the next 6,000 gallons) per month in excess of4,000 gallons per month 1.48Per 1,000 gallons (for the next 10,000 gallons) per month in excess of10,000 gallons per month 1.54Per 1,000 gallons (for the next 10,000 gallons) per month in excess of20,000 gallons per month 1.64Per 1,000 gallons (for the next 10,000 gallons) per month in excess of30,000 gallons per month 1.73Per 1,000 gallons (for the next 10,000 gallons) per month in excess of40,000 gallons per month 1.81Per 1,000 gallons per month in excess of 50,000 gallons per month 3.62Multi-Family and Commercial:Monthly minimum, including use of 2,000 gallons per month 26.77Per 1,000 gallons (for the next 2,000 gallons) per month in excess of2,000 gallons per month 1.48Per 1,000 gallons (for the next 6,000 gallons) per month in excess of4,000 gallons per month 1.50Per 1,000 gallons (for the next 30,000 gallons) per month in excessof 10,000 gallons per month 1.75Per 1,000 gallons (for the next 110,000 gallons) per month in excess of40,000 gallons per month 2.00Per 1,000 gallons (for the next 150,000 gallons) per month in excessof 150,000 gallons per month 2.26Per 1,000 gallons (for the next 300,000 gallons) per month in excessof 300,000 gallons per month 2.76Per 1,000 gallons (for the next 400,000 gallons) per month in excessof 600,000 gallons per month 3.42Per 1,000 gallons per month in excess of 1,000,000 gallons per month 3.50Outside City Limits:The rates for water outside the City limits shall be two times thoseestablished for commercial rates.285

TABLE 6 - MONTHLY SEWER RATES (BASED ON WATER CONSUMPTION)Sewer Rates(Effective January 1, 2011)Inside City LimitsResidential:Monthly minimum, including the use of 2,000 gallons per month $8.50Per 1,000 gallons (for the next 2,000 gallons) per month in excess of2,000 gallons $2.29Per 1,000 gallons (for the next 6,000 gallons) per month in excessof 4,000 gallons per month $2.33Per 1,000 gallons (for the next 10,000 gallons) per month in excess of10,000 gallons per month $2.45Per 1,000 gallons (for the next 10,000 gallons) per month in excess of20,000 gallons per month $2.63The maximum charge will be up to 30,000 gallons and the equivalent of$36.89.Commercial:Monthly minimum, including use of 2,000 gallons per month $18.35Per 1,000 gallons (for the next 2,000 gallons) per month in excess of2,000 gallons per month $1.69Per 1,000 gallons (for the next 6,000 gallons) per month in excess of4,000 gallons per month $1.89Per 1,000 gallons (for the next 20,000 gallons) per month in excessof 10,000 gallons per month $1.98Per 1,000 gallons (for the next 10,000 gallons) per month in excess of30,000 gallons per month $2.16Per 1,000 gallons (for the next 10,000 gallons) per month in excessof 40,000 gallons per month $2.24Per 1,000 gallons (for the next 150,000 gallons) per month in excessof 150,000 gallons per month $2.49Per 1,000 gallons (for the next 300,000 gallons) per month in excessof 300,000 gallons per month $2.75Per 1,000 gallons (for the next 400,000 gallons) per month in excessof 600,000 gallons per month $3.27Per 1,000 gallons per month in excess of 1,000,000 gallons per month $3.96There shall be no maximum monthly charges for commercial users.Outside City Limits:The rates for sewer outside the City Limits shall be two times those established forcommercial rates.286

Old Rates(Effective January 1, 2010)Inside City LimitsResidential:Monthly minimum, including use of 4,000 gallons per month $8.50Per 1,000 gallons (for the next 6,000 gallons) per month in excess of4,000 gallons per month $1.03Per 1,000 gallons (for the next 10,000 gallons) per month in excess of10,000 gallons per month $1.08Per 1,000 gallons (for the next 10,000 gallons) per month in excess of20,000 gallons per month $1.14The maximum charge will be up to 30,000 gallons and the equivalent of$30.89.TABLE 6 - MONTHLY SEWER RATES (BASED ON WATER CONSUMPTION)(CONTINUED)Commercial:Monthly minimum, including use of 4,000 gallons per month $13.00Per 1,000 gallons (for the next 6,000 gallons) per month in excess of4,000 gallons per month $1.25Per 1,000 gallons (for the next 10,000 gallons) per month in excess of10,000 gallons per month $1.31Per 1,000 gallons (for the next 10,000 gallons) per month in excess of20,000 gallons per month $1.37Per 1,000 gallons (for the next 10,000 gallons) per month in excess of30,000 gallons per month $1.43Per 1,000 gallons (for the next 10,000 gallons) per month in excess of40,000 gallons per month $1.48Per 1,000 gallons (for the next 50,000 gallons) per month in excess of50,000 gallons per month $1.54Per 1,000 gallons (for the next 50,000 gallons) per month in excess of100,000 gallons per month $1.60Per 1,000 gallons (for the next 50,000 gallons) per month in excess of150,000 gallons per month $1.65Per 1,000 gallons (for the next 50,000 gallons) per month in excess of200,000 gallons per month $1.71Per 1,000 gallons (for the next 50,000 gallons) per month in excess of250,000 gallons per month $1.77Per 1,000 gallons (for the next 50,000 gallons) per month in excess of300,000 gallons per month $1.82Per 1,000 gallons (for the next 50,000 gallons) per month in excess of350,000 gallons per month $1.88Per 1,000 gallons (for the next 50,000 gallons) per month in excess of400,000 gallons per month $1.94Per 1,000 gallons (for the next 50,000 gallons) per month in excess of450,000 gallons per month $2.00287

Per 1,000 gallons (for the next 50,000 gallons) per month in excess of500,000 gallons per month $2.05Per 1,000 gallons (for the next 50,000 gallons) per month in excess of550,000 gallons per month $2.11Per 1,000 gallons (for the next 50,000 gallons) per month in excess of600,000 gallons per month $2.16Per 1,000 gallons (for the next 50,000 gallons) per month in excess of650,000 gallons per month $2.22Per 1,000 gallons (for the next 50,000 gallons) per month in excess of700,000 gallons per month $2.28Per 1,000 gallons (for the next 50,000 gallons) per month in excess of750,000 gallons per month $2.34Per 1,000 gallons (for the next 50,000 gallons) per month in excess of800,000 gallons per month $2.39Per 1,000 gallons (for the next 50,000 gallons) per month in excess of850,000 gallons per month $2.45Per 1,00 gallons (for the next 50,000 gallons) per month in excess of900,000 gallons per month $2.51Per 1,000 gallons (for the next 50,000 gallons) per month in excess of950,000 gallons per month $2.57Per 1,000 gallons per month in excess of 1,000,000 gallons per month $2.62There shall be no maximum monthly charges for commercial users.Outside City LimitsThe rates for water outside the City limits shall be two times thoseestablished for commercial rates288

System Improvements 154,422,056 121,178,164 275,600,220 153,166,635 114,484,049 267,650,684 145,432,603 112,466,222 257,898,825Vehicles and Equipment 8,417,463 8,090,771 16,508,234 7,512,781 7,649,439 15,162,220 6,914,288 7,322,401 14,236,689Buildings 23,917,848 27,403,618 51,321,466 22,206,391 21,224,034 43,430,425 13,395,112 21,209,597 34,604,709Land and Improvements 44,686,054 4,531,525 49,217,579 34,482,381 4,531,525 39,013,906 29,811,988 4,531,525 34,343,513Easements 170,534 201,395 371,929 121,934 201,395 323,329 - - -Construction In Progress 60,961,884 19,498,038 80,459,922 36,186,936 24,817,915 61,004,851 28,722,303 11,528,447 40,250,750Less: Total Depreciation (92,880,401) (61,020,411) (153,900,812) (86,006,220) (55,378,617) (141,384,837) (79,123,908) (49,705,564) (128,829,472)Value After Depreciation 199,695,438 119,883,100 319,578,538 167,670,838 117,529,740 285,200,578 145,152,386 107,352,628 252,505,014System Improvements 120,792,897 93,917,054 214,709,951 113,881,674 89,431,498 203,313,172 110,303,883 74,321,403 184,625,286Vehicles and Equipment 6,811,377 7,494,843 14,306,220 5,449,703 5,865,521 11,315,224 4,464,891 5,443,216 9,908,107Buildings 13,245,692 18,308,734 31,554,426 13,245,692 18,308,734 31,554,426 13,245,692 17,759,212 31,004,904Land and Improvements 21,617,530 4,531,525 26,149,055 19,792,793 4,531,525 24,324,318 18,012,171 4,531,252 22,543,696Construction in Progress 16,385,573 7,948,202 24,333,775 10,870,641 4,769,294 15,639,935 5,782,543 15,180,078 20,962,621Less: Total Depreciation (73,120,032) (44,615,508) (117,735,540) (68,006,208) (39,990,212) (107,996,220) (62,790,899) (35,956,413) (98,747,312)Value After Depreciation 105,733,037 87,584,850 193,317,887 95,124,295 82,916,560 178,040,855 89,018,281 81,279,021 170,297,302TABLE 7VALUE OF SYSTEM-CITY OF LAREDOUTILITIES2011 2010 2009Total Total TotalWater Sewer Utilities Water Sewer Utilities Water Sewer Utilities2892008 2007 2006Total Total TotalWater Sewer Utilities Water Sewer Utilities Water Sewer Utilities

Fiscal Year Ended Sept. 30, 2011 2010 2009Total Total TotalWater Sewer Utilities Water Sewer Utilities Water Sewer UtilitiesResources:Net System Value $ 199,695,438 119,883,100 319,578,538 167,670,838 117,529,740 285,200,578 145,152,386 107,352,628 252,505,014Cash and Investments 140,604,318 51,560,635 192,164,953 81,639,476 44,109,722 125,749,198 91,353,207 56,418,094 147,771,301Other Sources 12,143,781 4,514,104 16,657,885 13,201,529 4,155,250 17,356,779 5,665,612 3,520,180 9,185,792Total Resources 352,443,537 175,957,839 528,401,376 262,511,843 165,794,712 428,306,555 242,171,205 167,290,902 409,462,107Obligations:Bonds Payable 176,603,068 68,790,522 245,393,590 112,753,816 62,641,553 175,395,369 107,802,522 66,627,155 174,429,677Less: Bond Funds (6,236,122) (1,568,062) (7,804,184) (2,370,132) (1,531,444) (3,901,576) (2,060,373) (1,546,107) (3,606,480)170,366,946 67,222,460 237,589,406 110,383,684 61,110,109 171,493,793 105,742,149 65,081,048 170,823,197Other Obligations 21,425,167 3,847,482 25,272,649 18,296,292 5,539,658 23,835,950 14,185,069 3,167,643 17,352,682Total Obligations 191,792,113 71,069,942 262,862,055 128,679,976 66,649,767 195,329,743 119,327,218 68,248,691 188,175,879City's Equity In System $ 160,651,424 104,887,897 265,539,321 133,831,867 100,144,945 232,976,812 122,843,987 99,042,211 221,286,228Percentage City's EquityIn System 45.58% 59.61% 50.25% 50.98% 60.40% 54.39% 50.73% 59.20% 54.40%Net System Value $ 105,733,037 87,584,850 193,317,887 95,124,295 82,916,560 178,040,855 89,018,281 81,279,021 170,297,302Cash and Investments 73,341,316 50,294,270 123,635,586 57,112,032 34,294,373 91,406,405 46,788,214 25,619,286 72,407,500Other Sources 5,241,840 4,000,808 9,242,648 4,701,477 2,513,872 7,215,349 4,380,439 2,420,388 6,800,827Total Resources 184,316,193 141,879,928 326,196,121 156,937,804 119,724,805 276,662,609 140,186,934 109,318,695 249,505,629Obligations:Bonds Payable 72,779,717 59,144,593 131,924,310 51,247,410 41,006,234 92,253,644 46,758,244 34,686,718 81,444,962Less: Bond Funds (2,128,548) (1,583,837) (3,712,385) (2,145,992) (1,624,617) (3,770,609) (1,612,118) (980,733) (2,592,851)70,651,169 57,560,756 128,211,925 49,101,418 39,381,617 88,483,035 45,146,126 33,705,985 78,852,111Other Obligations 11,215,993 3,793,936 15,009,929 10,178,418 2,978,020 13,156,438 8,590,035 2,056,101 10,646,136Total Obligations 81,867,162 61,354,692 143,221,854 59,279,836 42,359,637 101,639,473 53,736,161 35,762,086 89,498,247City's Equity In System $ 102,449,031 80,525,236 182,974,267 97,657,968 77,365,168 175,023,136 86,450,773 73,556,609 160,007,382Percentage City's EquityIn System 55.58% 56.76% 56.09% 62.23% 64.62% 63.26% 61.67% 67.29% 64.13%TABLE 8: CITY’S EQUITY IN UTILITY SYSTEM290Fiscal Year Ended Sept. 30, 2008 2007 2006Total Total TotalWater Sewer Utilities Water Sewer Utilities Water Sewer UtilitiesResources:

For Fiscal Year EndedSeptember 30, 2011 2010 2009Total Total TotalWater Sewer Utilities Water Sewer Utilities Water Sewer UtilitiesRevenuesCharges for Services $ 31,391,552 27,438,365 58,829,917 25,455,038 22,612,937 48,067,975 26,937,378 19,819,164 46,756,542Rental Of Facilities 40,128 - 40,128 40,128 - 40,128 40,128 - 40,128Interest 79,399 64,847 144,246 121,919 84,664 206,583 350,531 273,926 624,457Miscellaneous 3,625,787 100,640 3,726,427 3,535,088 110,909 3,645,997 1,555,527 269,182 1,824,709Total Revenues 35,136,866 27,603,852 62,740,718 29,152,173 22,808,510 51,960,683 28,883,564 20,362,272 49,245,836Administrative 2,850,418 4,260,760 7,111,178 2,793,650 4,038,665 6,832,315 2,991,019 2,000,407 4,991,426Utility Engineering 876,627 - 876,627 826,978 - 826,978 690,694 - 690,694Utility Billing 3,030,774 - 3,030,774 2,929,649 - 2,929,649 2,818,275 - 2,818,275Asset Management 277,917 - 277,917 260,108 - 260,108 234,988 - 234,988Water Treatment Plant 7,073,309 - 7,073,309 6,414,438 - 6,414,438 6,819,136 - 6,819,136Transmission and Distribution 2,700,232 - 2,700,232 3,600,821 - 3,600,821 3,835,000 - 3,835,000Water Pollution Control 427,830 - 427,830 392,207 - 392,207 393,211 - 393,211Wastewater Treatment - 5,351,976 5,351,976 - 5,319,244 5,319,244 - 4,765,446 4,765,446Wastewater Collection - 3,002,356 3,002,356 - 2,733,149 2,733,149 - 2,665,461 2,665,461Net Available for Debt Service $ 17,899,759 14,988,760 32,888,519 11,934,322 10,717,452 22,651,774 11,101,241 10,930,958 22,032,199Number of Customers 63,703 59,995 62,195 58,726 61,171 57,903TABLE 9: UTILITY SYSTEM CONDENSED STATEMENT OF OPERATIONS PART 1Expenses291Total Expenses 17,237,107 12,615,092 29,852,199 17,217,851 12,091,058 29,308,909 17,782,323 9,431,314 27,213,637

Charges for Services $ 26,265,698 14,006,232 40,271,930 24,977,835 13,055,433 38,033,268 23,129,698 14,006,232 40,271,930Rental Of Facilities 40,128 - 40,128 40,128 - 40,128 38,122 - 38,122Interest 711,991 265,542 977,533 1,001,877 506,934 1,508,811 585,645 389,384 975,029Miscellaneous 339,801 369,861 709,662 463,192 587,121 1,050,313 294,506 429,905 724,411Total Revenues 27,357,618 14,641,635 41,999,253 26,483,032 14,149,488 40,632,520 24,047,927 14,927,662 38,975,589Water Treatment Plant 6,742,276 - 6,742,276 5,956,680 - 5,956,680 6,090,084 - 6.090,084Transmission and Distribution 3,495,224 - 3,495,224 3,144,501 - 3,144,501 2,803,090 - 2,803,090Water Pollution Control 437,807 - 437,807 528,799 - 528,799 502,870 - 502,870Wastewater Treatment - 4,792,566 4,792,566 - 4,133,862 4,133,862 - 3,662,090 3,662,090Wastewater Collection - 2,620,294 2,620,294 - 2,526,732 2,526,732 - 2,280,698 2,280,698Total Expenses 17,030,252 9,510,247 26,540,499 15,098,280 9,533,193 24,631,473 14,010,809 8,846,090 22,497,218Net Available for Debt Service $ 10,327,366 5,131,388 15,458,754 11,384,752 4,616,295 16,001,047 10,037,118 6,441,253 16,478,371Number of Customers 60,519 57,851 59,409 56,065 57,489 54,568TABLE 9: UTILITY SYSTEM CONDENSED STATEMENT OF OPERATIONS PART 2For Fiscal Year EndedSeptember 30, 2008 2007 2006Total Total TotalWater Sewer Utilities Water Sewer Utilities Water Sewer UtilitiesRevenues292ExpensesAdministrative 2,583,385 2,097,387 4,680,772 2,076,626 2,872,599 4,949,225 1,779,174 2,543,621 4,322,795Utility Engineering799,864 - 799,864752,441 - 752,441 638,979 - 638,979Utility Billing2,724,036 - 2,724,0362,368,785 - 2,368,785 1,950,102 - 1,950,102Asset Management 247,660 - 247,660 270,448 - 270,448 246,510 - 246,510

2016 7,078,119 5,602,413 12,680,532 2,263,403 3,631,183 3,631,183 16,311,715 20.70%2021 7,070,735 4,788,630 11,859,365 2,268,798 2,820,338 2,820,338 14,679,703 45.71%TABLE 10 Debt Service RequirementsPlus Contractual Plus Contractual& General & GeneralObligation ObligationFiscal Water Water Sewer % ofYear Revenue System Debt Sewer System Debt Utilty GrandEnded Debt Service Water Revenue Service Sewer Grand Total9-30 Requirement Requirements Total Debt Requirements Total Total Retired2012 7,082,776 8,135,370 15,218,146 2,263,463 5,478,269 5,478,269 20,696,4152013 7,078,324 8,152,942 15,231,266 2,269,221 5,476,305 5,476,305 20,707,5712014 7,072,755 7,587,468 14,660,223 2,272,081 5,114,526 5,114,526 19,774,7492015 7,072,213 5,600,140 12,672,353 2,265,905 3,626,500 3,626,500 16,298,8532017 7,074,415 5,609,668 12,684,083 2,265,843 3,628,557 3,628,557 16,312,6402018 7,071,201 5,355,117 12,426,318 2,272,032 3,463,151 3,463,151 15,889,4692019 7,061,234 5,315,250 12,376,484 2,269,848 2,979,892 2,979,892 15,356,3762020 7,071,515 5,001,276 12,072,791 2,263,147 2,981,137 2,981,137 15,053,9282932022 7,072,683 5,887,068 12,959,751 2,267,474 1,704,200 1,704,200 14,663,9512023 7,070,889 5,583,013 12,653,902 2,275,870 1,701,693 1,701,693 14,355,5952024 7,070,414 5,546,667 12,617,081 2,266,450 1,427,878 1,427,878 14,044,9592025 6,709,504 5,504,760 12,214,264 1,926,513 1,429,800 1,429,800 13,644,0642026 6,385,159 5,467,264 11,852,423 1,781,419 1,431,550 1,431,550 13,283,973 64.40%2027 5,697,018 5,431,883 11,128,901 1,434,482 1,425,925 1,425,925 12,554,8262028 5,055,058 5,391,601 10,446,659 733,190 1,430,525 1,430,525 11,877,1842029 5,014,462 5,347,941 10,362,403 705,769 1,427,500 1,427,500 11,789,9032030 4,628,225 5,302,177 9,930,402 708,850 1,429,000 1,429,000 11,359,4022031 4,629,769 5,252,206 9,881,975 710,619 1,427,500 1,427,500 11,309,475 80.14%2032 4,633,437 5,207,452 9,840,889 706,206 1,427,875 1,427,875 11,268,7642033 4,628,969 5,152,459 9,781,428 710,481 1,429,875 1,429,875 11,211,3032034 4,630,969 3,361,440 7,992,409 708,313 - - 7,992,4092035 4,628,913 3,306,065 7,934,978 709,700 - - 7,934,9782036 4,676,094 3,243,796 7,919,890 662,850 - - 7,919,890 92.51%2037 4,671,987 3,184,304 7,856,291 667,875 - - 7,856,2912038 4,667,381 3,122,098 7,789,479 671,550 - - 7,789,4792039 4,661,750 3,052,012 7,713,762 673,875 - - 7,713,7622040 4,664,306 - 4,664,306 674,850 - - 4,664,306 100.00%Total 171,930,274 145,492,480 317,422,754 43,670,077 56,893,179 56,893,179 374,315,933

TABLE 11: COVERAGE AND FUND BALANCESWaterworks:Average Annual Principal and Interest Requirements $ 6,236,122Coverage of Average Requirements by 2011 Net Income 2.87Maximum Principal and Interest Revenue BondRequirementsAfter Fiscal Year Ended September 30, 2011 $ 7,082,776Coverage of Maximum Requirements by 2011 Net Income 2.53Outstanding New Series Water Revenue Bonds $ 171,930,274Interest and Sinking Fund as of September 30, 2011 $ 902,500Reserve Fund as of September 30, 2011 $ 6,236,122Contingency Fund as of September 30, 2011 $ 1,812,626Sewer:Average Annual Principal and Interest Requirements $ 1,568,062Coverage of Average Requirements by 2011 Net Income 9.55Maximum Principal and Interest Revenue BondRequirementsAfter Fiscal Year Ended September 30, 2011 $ 2,275,870Coverage of Maximum Requirements by 2011 Net Income 6.59Outstanding New Series Sewer Revenue Bonds $ 43,670,077Interest and Sinking Fund as of September 30, 2011 $ 321,21263Reserve Fund as of September 30, 2011 $ 1,568,062Contingency Fund as of September 30, 2011 $ 1,385,803294

TABLE 12: COVERAGE AND FUND BALANCES – UTILITY SYSTEMUtility SystemWaterworks Sewer TotalNet Funds Available for Debt Service $ 17,899,759 14,988,760 32,888,519Average Annual Principal and InterestRequirements 6,236,122 1,568,062 7,804,184Coverage of Average AnnualRequirements by Funds Availablefor Debt Service 2.87 9.55 4.21Maximum Principal and InterestRevenue Bond Requirements 7,082,776 2,275,870 9,358,646Coverage of Maximum Requirementby Funds Available for Debt Service 2.53 6.59 3.51Outstanding Revenue Bonds as of09/30/2011 171,930,274 43,670,077 215,600,351Interest & Sinking Fund as of 09/30/2011 902,500 321,212 1,223,712Reserve Funds as of 09/30/2011 6,236,122 1,568,062 7,804,184Contingency Fund as of 09/30/2011 $ 1,812,626 1,385,803 3,198,429295

LAREDO ENERGY ARENASPORTS VENUE SALES TAX REVENUE BONDSThe City of Laredo, Texas issued the Sports Venue Sales Tax Revenue Improvement and RefundingBonds, Series 2005, to acquire and construct additional parking facilities for the Laredo Energy Arena, toachieve a debt service savings by partially refunding outstanding Sports Venue Tax Revenue Bonds,Series 2001, used to construct a sports venue project for a multipurpose entertainment arena and relatedinfrastructure, and to pay for the issuance costs of the Bonds. The principal and interest due on theSports Venue Tax Revenue Bonds, Series 2001 and 2005, are to be paid on the scheduled interestpayment dates from funds deposited with an escrow agent until discharged.The bonds constitute special and limited obligations of the City and are payable solely from, and securedsolely by a first lien on and pledge of the Sales Tax Revenues, as approved by the citizens on a specialelection on August 12, 2000. The Sales Tax Revenues consist of the gross receipts from a π of 1% salesand use tax collected within the boundaries of the City. The bonds were issued pursuant to the provisionsof (i) Chapter 334 of the Texas Local Government code, as amended (the “Act”), and (ii) an authorizingordinance (the “Ordinance”) adopted by the City Council of the City on May 23, 2001.The bonds are payable solely from, and secured solely by, a first lien on and pledge of the Sales TaxRevenues as provided in the Ordinance and not from any other revenues, properties or income of theCity. Neither the State of Texas nor any political corporation, subdivision, or agency of the State otherthan the City will be obligated to pay the bonds or the interest thereon, and neither the faith and credit northe taxing power of the State or any political corporation, subdivision, or agency thereof is pledged to thepayment of principal of or interest on the bonds.The construction of Laredo Entertainment Center was completed by September 2002. This enormousentertainment center will introduce inexpensive, family-oriented entertainment services, such as concerts,rodeos, circuses, civic events, sporting events, and more. On March 18, 2010 the City of Laredo, alongwith the Laredo Bucks officially announced that the Laredo Entertainment Center name will change to theLaredo Energy Arena. Laredo Energy signed a four-year naming rights agreement with options forextension with the City of Laredo.The Arena itself offers a diverse mixture of world-class entertainment, with a 10,000 seating capacity, over2,000 parking spaces and a team store. The 178,000 square foot, $36.5 million facility opened in October2002. Each year the Laredo Energy Arena hosts more than 100 events including major concerts by artistssuch as Mana, Shakira, Vicente Fernandez, Ludacris, Lil Wayne, Rihanna, Alan Jackson, Jason Aldean,George Lopez and Staind to name a few.After the construction of the Arena was completed, approximately 220 new jobs were created for theoperation of the facility. Furthermore, contracts were awarded to local businesses whose products arerequired for the Laredo Energy Arena’s daily operations.BASEBALL STADIUMThe City of Laredo, Texas issued the Sports Venue Sales Tax Revenue, Taxable Series 2011, for thepurpose of acquiring, constructing and equipping a baseball stadium (Laredo Ballpark) and relatedinfrastructure and to pay costs of issuance. The Laredo Ballpark was approved by the voters of the City atan election held on November 4, 008as a related venue project to a previously approved and constructedmulti-purpose entertainment arena. The Laredo Ballpark located in the Laredo, Texas will have over3,940 seats which include ten suites, a party suite, club seating and fixed general admission seating.Grass berm areas will accommodate an additional 1,700 spectators and picnic tables another 370.Restrooms, typical fan amenities and cooking concession stands will be distributed throughout the 10 acreballpark. A club with bar, press box, team offices, clubhouses, and maintenance areas will also beincluded. The remaining 29 acres of the site will be utilized to park approximately 985 vehicles with anarea for future parking expansion; the construction cost for the project will be approximately $21 million.296

TABLE 1 – SALES TAX RECEIPTSFiscal YearEnding 9/30Actual 1% Sales &Use Ta x Rece ipts1/4 of 1% SalesTax ReceiptsMaximumAnnual DebtServiceEstimatedCoverage2002 $ 17,158,252 * 4,289,561 3,121,125 1.372003 18,037,788 4,509,447 3,121,125 1.442004 19,288,849 4,822,212 3,121,125 1.552005 21,075,124 5,268,781 3,121,125 1.692006 23,862,993 5,965,748 3,121,125 1.912007 25,426,235 6,356,559 3,121,125 2.042008 25,962,164 6,490,541 3,121,125 2.082009 24,315,518 6,078,880 3,121,125 1.952010 23,471,292 5,867,823 3,121,125 1.882011 26,935,219 6,733,805 3,871,463 1.74(*) These amounts were generated by multiplying, for each Fiscal Year, the amount of actual 1.0% salesand use tax receipts for such Fiscal Year by .25. These figures therein are provided for illustrativepurposes only. The ¼ of 1% Sales Tax securing the Bonds has only been collected since January 1,2001. Therefore, the amounts do not represent actual collections of the Sales Tax securing the Bonds,but simply provide an estimate of the amounts of Sales Tax Revenues that might have been collected hadthe ¼ of 1% Sales Tax been in effect since Fiscal Year 1996.TABLE 2 - COVERAGE.Average Annual Princ ipal and Interes t Requirements, 2011-2036 2,420,047Fiscal Year 2011 Sales Tax Revenues 6,733,805Coverage of Average Requirements by Fiscal Year 2011 2.78Maximum Principal and Interes t Requirements 2024 3,871,463Fiscal Year 2011 Sales Tax Revenues 6,733,805Coverage of Maximum Requirements by Fiscal 2011 1.74297

TABLE 3 – DEBT SERVICE REQUIREMENTS2011 Sports Venue Sales TaxRevenue Bonds, Taxable SeriesTotal% ofFiscal Year Outstanding Outstanding Debt ServiceEnded 9-30 Debt Principal Interest Debt Retired2012 3,116,350 240,000 507,093 3,863,443 6.52%2013 3,116,225 265,000 485,050 3,866,2752014 3,116,725 270,000 481,101 3,867,8262015 3,117,600 275,000 476,217 3,868,8172016 3,118,600 280,000 470,327 3,868,927 32.65%2017 3,114,600 285,000 463,213 3,862,8132018 3,115,350 295,000 454,684 3,865,0342019 3,112,531 305,000 443,954 3,861,4852020 3,115,481 315,000 431,386 3,861,867 58.73%2021 3,114,875 330,000 417,743 3,862,6182022 3,115,750 345,000 402,963 3,863,7132023 3,119,625 360,000 387,225 3,866,8502024 3,121,125 380,000 370,338 3,871,463 84.84%2025 - 395,000 352,268 747,2682026 - 415,000 333,025 748,0252027 - 440,000 311,075 751,0752028 - 460,000 286,550 746,550 89.90%2029 - 490,000 260,662 750,6622030 - 515,000 233,276 748,2762031 - 545,000 204,391 749,3912032 - 575,000 172,721 747,721 94.95%2033 - 610,000 138,060 748,0602034 - 645,000 101,351 746,3512035 - 685,000 62,449 747,4492036 - 725,000 21,206 746,206 100.00%$ 40,514,837 10,445,000 $ 8,268,328 $ 59,228,165298

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SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS CITY OF LAREDO, TEXASPERIOD ENDED SEPTEMBER 30, 2011Total U. S. Department of Health and Human Services $ 6,242,912 509,815 2,234,783 2,284,733 459,865(Continued)GRANT NAMEPass Accrued AccruedFederal Through (Deferred) (Deferred)CFDA Grantor's Program or Revenue at Revenue Revenue atFederal Grantor / Pass Through Grantor / Program Title Number Number Award Amount September 30, 2010 Recognized Receipts September 30, 2011U.S. Department of Health and Human Services302Center for Disease Control and PreventionNational Center for Chrinic Disease Prevention andHealth Promotion -Laredo Health Care Needs Assessment 93.283 1H75DP002741-01 $ 200,000 - 181,581 169,041 12,540Passed Through Texas Department of State Health Services:Center for Disease Control and Prevention, Public Health Services:Public Health and Social Services Emergency FundControl Program - TB Federal '00 93.116 N/A 183,186 896 - - 896TB Prevention & Control & Lab Program - '10 93.116 2010-034138-001 171,081 13,491 29,587 43,078 -TB Prevention & Control & Lab Program - '11 93.116 2011-037502-001 165,968 - 101,537 83,777 17,760Occupational Safety and Health Research Projects:Lead Poisoning Prevention 04-05 93.262 N/A 15,000 622 - - 622Center for Disease Control and Prevention, Public Health Services:Immunization Grants:Immunization Locals 10 93.268 2010-031606-001 230,491 9,191 - 9,191 -Immunization Locals 11 93.268 2011-036323-001 230,491 12,840 217,446 208,470 21,816Immunization Locals 12 93.268 2012-039107-001 230,491 - 17,269 - 17,269Center for Disease Control and PreventionInvestigations and Technical Assistance - Bureau of Clinical andNutrition Services -Public Health Emergency Preparedness - 09-10 93.069 2009-031946-001 317,727 6,909 76,243 36,791 46,361Public Health Emergency Preparedness - 10-11 93.069 2010-035740-001 318,285 37,125 254,830 291,955 -Public Health Emergency Preparedness - 11-12 93.018 2011-038859-001 267,077 - 46,210 - 46,210Public Health Emergency Response - 10-11 93.018 2010-034773-001 120,912 63,386 - 63,386 -Bioterrorism Pandemic - 07-08 93.283 2008-022927-001 59,527 2,880 - - 2,880Early Warning Infectious Disease Surveillance 2008 93.283 2008-024694-001 172,239 13,231 - - 13,231Early Warning Infectious Disease Surveillance 2010 93.069 2009-031669-001 150,000 3,637 13,641 4,344 12,934Early Warning Infectious Disease Surveillance 2011 93.069 2010-035558-001 179,000 23,517 136,790 154,845 5,462Early Warning Infectious Disease Surveillance 2012 93.069 2011-038682-001 75,000 - 12,744 - 12,744Preventive Health & Health Services '02-03 - NTD 93.283 N/A 155,289 11,022 - - 11,022Health Resources and Services Administration:H.I.V. Care Formula Grant - 10-11 93.917 019-01-10 413,189 96,162 192,735 288,897 -H.I.V. Care Formula Grant - 11-12 93.917 019-01-11 455,438 - 202,122 130,148 71,974H. I. V. Prevention Activities - Health Department BasedEpidemologic Research Studies of AIDS & HIV in Selected Population GroupsEpidemologic Research Studies of AIDS & HIV '10 93.943 2010-034567-001 388,217 40,856 123,255 164,111 -Epidemologic Research Studies of AIDS & HIV '11 93.943 2011-037623-001 392,217 - 312,487 232,525 79,962Prevention Services for H.I.V. Infected Persons '07 93.940 N/A 69,993 1,342 - - 1,342Prevention Services for H.I.V. Infected Persons '08 93.940 N/A - 522 - - 522Centers for Disease Control and Prevention:Preventive Health & Health Services Block GrantOffice of Border Health - NTD 93.991 N/A 28,053 265 - - 265Office of Regional Administrative Services - 08-09 / O.P.H.P. 93.991 2009-028162-001 306,835 5,548 - - 5,548Office of Regional Administrative Services - 09-10 / O.P.H.P. 93.991 2010-032824-001 306,835 165,481 1,226 166,707 -Office of Regional Administrative Services - 10-11 / O.P.H.P. 93.991 2011-035586-001 306,835 - 285,422 237,467 47,955Office of Regional Administrative Services - 11-12 / O.P.H.P. 93.991 2012-039489-001 248,536 - 28,841 - 28,841Preventive Health & Health Services '01-02 - Border Health 93.991 N/A 5,000 892 - - 892Center for Disease Control and PreventionInvestigations and Technical AssistanceCommunity Diabertes Project - 11-12 93.283 2012-039709-001 80,000 - 817 - 817

SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS CITY OF LAREDO, TEXASPERIOD ENDED SEPTEMBER 30, 2011Direct Programs:Community Planning and Development:Community Development Block Grant / Entitlement Grants 08 14.218 N/A $ 3,589,985 - 1,346,871 1,346,871 -Community Development Block Grant / Entitlement Grants 09 14.218 N/A 3,634,339 - 762,748 762,748 -Community Development Block Grant / Entitlement Grants 10 14.218 N/A 3,936,450 70,308 1,698,980 1,485,817 283,471Emergency Shelter Grant Program 2009 14.231 N/A 159,838 11,941 28,967 40,908 -Emergency Shelter Grant Program 2010 14.231 N/A 159,618 - 106,755 90,169 16,586Housing Oportunities for Persons with Aids - 09-10 14.241 019-3-09 83,700 4,220 49,752 53,972 -Housing Oportunities for Persons with Aids - 10-11 14.241 019-3-11 88,000 - 44,408 33,649 10,759HOME Investment Partnership Program 2008GRANT 14.239 N/A 1,248,285 - 112,011 112,011 -HOME Investment Partnership Program 2009 GRANT 14.239 N/A 1,389,582 - 2,620 2,620 -HOME Investment Partnership Program 2010 GRANT 14.239 N/A 1,381,796 58,327 331,287 385,358 4,256EDI-SP Neighborhood Initiative and Miscellaneous Grants 14.251 B-10-SP-TX-0114 200,000 - - - -Total U. S. Department of HUD 15,871,593 144,796 4,484,399 4,314,123 315,072GRANT NAMEPass Accrued AccruedFederal Through (Deferred) (Deferred)CFDA Grantor's Program or Revenue at Revenue Revenue atFederal Grantor / Pass Through Grantor / Program Title Number Number Award Amount September 30, 2010 Recognized Receipts September 30, 2011U.S. Department of Housing and Urban Development (HUD)U. S. Department of Transportation303Direct Programs:Federal Transit Administration:Federal Transit Capital Investment Grants:Fixed Guideway Modernization Bus & Bus Facility New Starts 20.500 TX03X274 2,546,681 - 114,026 10,112 103,914Fixed Guideway Modernization Bus & Bus Facility New Starts 20.500 TX030299 1,943,557 - - - -Fixed Guideway Modernization Bus & Bus Facility New Starts 20.500 TX040040 680,130 10,659 11,360 22,019 -Fixed Guideway Modernization Bus & Bus Facility New Starts 20.500 TX040047 714,000 - - - -Fixed Guideway Modernization Bus & Bus Facility New Starts 20.500 TX040055 776,000 - - - -Federal Transit Formula Grants:Urbanized Area Formula Program 20.507 TX904934 3,996,131 - 1,879,547 1,577,888 301,659Urbanized Area Formula Program 20.507 TX904891 4,040,202 277,158 1,708,677 1,985,835 -Federal Aviation Administration:Airport Improvement Program (Noise Mitigation) 20.106 3-48-0136-52-08 2,000,000 (26,233) 26,237 4 -Airport Improvement Program (Rehab Apron, Rehab Runway 14/31) 20.106 3-48-0136-53-09 4,416,530 15,975 363,176 379,151 -Airport Improvement Program (Rehab Apron, Rehab Runway 17/35) 20.106 3-48-0136-57-10 3,092,510 325,708 733,045 863,995 194,758Airport Improvement Program (Noise Mitigation) 20.106 3-48-0136-58-10 2,000,000 59,402 234,529 293,931 -Airport Improvement Program (Noise Mitigation) 20.106 3-48-0136-60-10 2,000,000 (48,333) 878,845 830,512 -Airport Improvement Program (Rehab General Apron) 20.106 3-48-0136-61-10 2,803,152 326,640 1,601,529 1,928,169 -Airport Improvement Program (Noise Mitigation) 20.106 3-48-0136-62-10 4,000,000 9,565 2,567,671 2,276,254 300,982Airport Improvement Program (Wildlife Hazard Study and Assessment) 20.106 3-48-0136-63-10 145,629 - 106,039 96,539 9,500Airport Improvement Program (Geographic Information System "AGIS" Survey) 20.106 3-48-0136-64-10 300,000 - 2,869 2,583 286Airport Improvement Program (Runway 17/35 Extension) 20.106 3-48-0136-65-10 8,843,166 - 8,567,463 8,142,984 424,479Airport Improvement Program (Rehab Apron, EMAS & Realign Taxiway) 20.106 3-48-0136-68-11 6,347,019 - 83,935 - 83,935Transportation Security Administration-Law Enf. Officer Reimb. Program 97.090 HSTS0208HSLR197 97,455 14,711 69,879 31,050 53,540Pass Through Texas Department of Transportation:Federal Transit Administration:New Freedom Program 20.521 51022F7311 157,368 12,351 95,893 108,244 -New Freedom Program 20.521 51022F7072 218,624 - 218,624 218,624 -New Freedom Program 20.521 51122F7087 221,425 - - - -Capital Assistance Program for Elderly Persons W/Disabilities 20.513 51122F7259 10,000 - 10,000 10,000 -Formula Grants for Other Than Urbanized Areas 20.509 51122F7062 661,226 - 661,226 661,226 -Formula Grants for Other Than Urbanized Areas 20.509 51122F7050 617,525 - - - -National Highway Traffic Safety - State & Community Highway SafetyTexas Department of TransportationComprehensive Commercial Vehicle STEP 20.600 2010-LAREDOPD-S-SYG-0146 40,000 8,466 - 8,466 -Comprehensive Commercial Vehicle STEP 20.600 2009-LAREDOPD-S-SYG-0282 40,000 8,972 - - 8,972Comprehensive STEP 20.600 2010-LAREDOPD-S-SYG-0135 94,442 10,547 - 10,547 -Step - CIOT 20.600 2011-LAREDOPD-CIOT-00012 $ 9,000 - 8,311 8,311 -

SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS CITY OF LAREDO, TEXASPERIOD ENDED SEPTEMBER 30, 2011U. S. Department of TransportationDirect Programs:Highway Planning and Construction-Industrial Streets El Portal Industrial Park * 20.205 CSJ-0922-33-116 $ 4,767,840 1,294,936 1,115,306 2,410,242 -Highway Planning and Construction-Industrial Streets InterAmerica Park * 20.205 CSJ-0922-33-130 3,723,720 612,875 451,151 1,064,026 -Highway Planning and Construction-Industrial Streets Modern, O. Salinas * 20.205 CSJ-0922-33-131 4,047,120 880,912 1,868,742 2,749,654 -Highway Planning and Construction-Industrial Streets Unitec Industrial Park * 20.205 CSJ-0922-33-132 3,215,520 658,232 1,657,150 2,133,917 181,465Highway Planning and Construction-Industrial Streets Laredo Int'l Airport * 20.205 CSJ-0922-33-138 77,522 - - - -Highway Planning and Construction-Industrial Streets Laredo Int'l Airport * 20.205 CSJ-0922-33-141 2,070,678 15,349 1,187,082 988,537 213,894Highway Planning and Construction-Arkansas St.Railroad Grade Separation * 20.205 CSJ-0922-33-099 1,122,016 35,924 262,374 245,477 52,821Highway Planning and Construction-Scott Sanchez RR Grade Separation * 20.205 CSJ-0922-33-105 393,873 - - - -Highway Planning & Const.-Federal Aid Hwy Pgm, Fed Lands Hwy Pgm * 20.205 50-72-2-10-1113-70-806 314,665 157,782 - 157,782 -Highway Planning & Const.-Federal Aid Hwy Pgm, Fed Lands Hwy Pgm * 20.205 50-72-2-11-1113-70-806 463,393 - 202,491 28,920 173,571Federal Transit Metropolitan Planning Grants-Metropolitan Planning 20.505 51-74-108-0122-11-810 81,435 - 81,435 81,435 -Total U. S. Department of Transportation 73,089,554 4,661,598 26,768,612 29,326,434 2,103,776U. S. Department of JusticePassed Through State Department of Criminal Justice:Criminal Justice Discretionary Grant ProgramOffice of Justice Program - Bureau of Justice Assistance -Edward Byrne Memorial Justice Assistance Grant Program:FY11 Justice Assistance Grant 16.738 2011-DJ-BX-3199 119,881 - - - -FY10 Justice Assistance Grant 16.738 2010-DJ-BX0494 142,603 - 51,035 43,717 7,318FY09 Justice Assistance Grant 16.738 2009-DJ-BX1331 139,813 - 29,778 29,778 -FY07 City of Laredo Justice Assistance Grant 16.738 2007-DJ-BX-0784 125,687 - 179 179 -FY08 Justice Assistance Grant 16.738 2008-DJ-BX-0579 40,343 - 192 192 -2009 Project Safe Neighborhood- Southern District of Texas 16.609 2009-GP-BX-0068 7,451 1,907 1,797 3,704 -Bulletproof Vest Partnership ProgramBulletproof Vest Partnership 2010 16.607 N/A 11,548 - 5,774 - 5,774Bulletproof Vest Partnership 2009 16.607 N/A 37,500 - 198 - 198Total U. S. Department of Justice 624,826 1,907 88,953 77,570 13,290Executive Office of the PresidentFinancial Task Force 05 95.001 I5PSSP571Z 630,665 30 - - 30Financial Task Force 06 95.001 I6PSSP571Z 652,250 1,241 101 1,342 -Financial Task Force 07 95.001 I7PSSP571Z 680,465 33,805 25,466 43,433 15,838Financial Task Force 08 95.001 I8PSSP571Z 806,747 12,559 95,647 35,617 72,589Financial Task Force 09 95.001 G09SS0001A 788,090 102,940 179,968 282,908 -Financial Task Force 10 95.001 G10SS0001A 598,907 171,095 391,657 492,640 70,112Financial Task Force 11 95.001 G11SS0001A 736,104 - 135,188 124,956 10,232South Texas Public Corruption Task Force 06 95.001 I6PSSP571Z 99,916 7,190 - 7,182 8South Texas Public Corruption Task Force 07 95.001 I7PSSP571Z 98,581 1,531 1,230 2,683 78South Texas Public Corruption Task Force 08 95.001 I8PSSP571Z 98,273 14,105 1,023 15,128 -South Texas Public Corruption Task Force 09 95.001 G09SS0001A 72,930 19,235 12,953 31,852 336South Texas Public Corruption Task Force 10 95.001 G10SS0001A 37,113 2,620 37,499 37,113 3,006South Texas Public Corruption Task Force 11 95.001 G11SS0001A 99,916 - 36,156 32,889 3,267Total Executive of the President $ 5,399,957 366,351 916,888 1,107,743 175,496(Continued)GRANT NAMEPass Accrued AccruedFederal Through (Deferred) (Deferred)CFDA Grantor's Program or Revenue at Revenue Revenue atFederal Grantor / Pass Through Grantor / Program Title Number Number Award Amount September 30, 2010 Recognized Receipts September 30, 2011U. S. Department of Agriculture304Passed Through Texas Department of State Health Services:Food & Nutrition Service - Special Supplemental Nutrition ProgramWomen, Infants and Children 09-10 * 10.557 2010-033379-001 4,133,295 729,195 25,403 754,598 -Women, Infants and Children 10-11 * 10.557 2011-037188-001 4,630,162 12,049 3,850,704 3,144,730 718,023Women, Infants and Children 11-12 * 10.557 2012-039949-001 2,281,795 - 632 - 632Women, Infants and Children Dietary Intern 10-11 * 10.557 2011-037188-001 33,522 - 9,183 - 9,183Women, Infants and Children Counties 09-10 * 10.557 2010-033379-001 - 95,850 1,622 97,472 -Women, Infants and Children Counties 10-11 * 10.557 2011-037188-001 - 1,073 461,710 354,432 108,351Total U. S. Department of Agriculture 11,078,774 838,167 4,349,254 4,351,232 836,189

SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS CITY OF LAREDO, TEXASPERIOD ENDED SEPTEMBER 30, 2011Federal Emergency Management AgencyDisaster Grants-Public Assistance (Presidentially Declared Disasters) 97.036 FEMA-1931-DR-PA $ - 483,101 67,361 679,365 (128,903)Pre-disaster Mitigation Planning Grant 97.017 PDM05-004 73,230 3,070 - - 3,070Staffing for Adequate Fire and Emergency Response (SAFER) 97.083 2006-FF-04283 1,552,500 28,661 111,064 139,725 -Assistance to Firefighters Grant (SAFER 2011) 97.044 EMW-2010-FH-00490 3,887,964 - 333,640 132,419 201,221Assistance to Firefighters Grant (AFG) 97.044 EMW-2008-FO-06946 400,000 86,130 - 86,130 -Passed Through GDEM:State Homeland Security Program (SHSGP) 97.067 2004 HSGP-41464 1,462,934 12,122 - - 12,122Homeland Security Grant Program (SHSP) 97.073 2009-SS-T9-0064 856,327 - 139,981 135,639 4,342Homeland Security Grant Program (SHSP-LEAP) 97.073 2009-SS-T9-0064 434,024 891,654 93,578 891,654 93,578Homeland Security Grant Program (SHSP) 97.073 2010-SS-T0-0008 315,000 - 53,424 - 53,424Passed Through HMGP:Hazard Mitigation Grant Program - Canal Street Channel Improvements 97.039 FEMA-1791-DR-TX 3,768,107 - 151,342 21,021 130,321Total U. S. Department of Homeland Security 12,750,086 1,504,738 950,390 2,085,953 369,175Total U. S. of Environmental Protection Agency 40,755,314 145,934 485,530 384,469 246,995ARRA-Federal Transit Formula Grants-Urbanized Area Formula Grant 20.507 TX-96-X001 4,757,091 - 4,081,382 4,081,382 -ARRA-State Energy Program-SECO Grant 81.041 CS0023 924,000 7,590 469,133 15,049 461,674ARRA-State Energy Program-SECO Grant 81.041 CM1124 145,000 - 145,000 113,399 31,601ARRA-State Energy Program-SECO Grant 81.041 CM1125 30,000 - 30,000 30,000 -ARRA- Edward Byrne Memorial Justice Assistance Grantto units of Local Government- Laredo JAG Recovery 16.804 2009-SB-B9-1063 602,748 14,065 128,464 142,529 -ARRA- Edward Byrne Memorial Justice Assistance Grantto states- Laredo Recovery Act 16.803 SU-09-A10-2329601-01 499,840 87,210 321,264 408,474 -ARRA- Edward Byrne Memorial Justice Assistance Grantto states- State JAG Grant 16.803 SU-09-A10-22246-01 298,400 156,922 50,045 206,967 -ARRA- Community Policing Services2010 COPS Hiring Program 16.71 2010ULWX0025 4,369,266 - 244,392 205,634 38,758ARRA-Dept. of Energy-Energy Efficiency and Conservation Block Grant 81.128 DE-EE0000967 2,083,600 (210,159) 1,435,139 1,075,421 149,559ARRA-HUD-Homeless Prevention & Rapid Re-Housing Program 14.257 S09-48-MY-0505 1,490,976 60,543 619,150 636,476 43,217ARRA-HUD-Neighborhood Stabilization Program 14.256 77090000107 2,127,102 627,338 675,080 787,294 515,124ARRA-HUD-Weatherization Assistance Program 81.042 16090000707 3,271,636 51,865 584,084 520,702 115,247ARRA-HUD- CDBG ARRA Entitlement Grants (CDBG-R) Ejido Ext. Prj. 14.253 B-09-MY-48-0505 975,026 - - - -ARRA-HRSA - Health Care and Other Facilities 93.887 C76HF15325 188,100 86,014 - 86,014 -ARRA-Capitalization Grants For Drinking Water State Revolving Funds * 66.468 2F-96692301-0 48,196,000 7,537,461 21,840,733 24,976,801 4,401,393ARRA-Highway Planning & Construction-Industrial St Laredo In'tl Airport * 20.205 CSJ-0922-33-138 524,539 - - - -ARRA-Highway Planning and Construction-Manadas Crk Hike/Bike Trail * 20.205 CSJ-0922-33-139 318,546 - - - -ARRA-Investmts. for Public Works and Eco. Develop. Facilities-River Vega 11.300 N/A 1,000,000 - 179,331 126,901 52,430Total American Recovery and Reinvestment Act 71,801,870 8,418,849 30,803,197 33,413,043 5,809,003Total Federal Assistance $ 237,614,886 16,592,155 71,082,006 77,345,300 10,328,861(Continued)GRANT NAMEPass Accrued AccruedFederal Through (Deferred) (Deferred)CFDA Grantor's Program or Revenue at Revenue Revenue atFederal Grantor / Pass Through Grantor / Program Title Number Number Award Amount September 30, 2010 Recognized Receipts September 30, 2011U.S. Department of Homeland Security305U. S. Department of Environmental Protection AgencySurvey, Studies, Investigations & Special Purpose GrantsEPA - Jefferson & Chacon Water and Wastewater Improvements 66.606 C-481961-01-0 8,200,000 107,589 - 107,589 -EPA - Health 66.035 RE-96654801-0 300,000 13,421 247 13,668 -Air Pollution Control Program Support:Passed Through Texas Commission on Environmental QualityContinuous Air Monitoring Station - Air Pollution Control Prog 06-09 66.001 582-7-72662 210,000 13,885 - 13,885 -Continuous Air Monitoring Station - Air Pollution Control Prog 66.001 581-11-86431 70,000 3,468 58,980 35,123 27,325Continuous Air Monitoring Station - Air Pollution Control Prog 66.001 581-11-86431 70,000 - 4,104 - 4,104Passed Through Texas Water Development Board: Surveys, studies, investigations,and special purpose grants.NADB - Colonia Water & Wastewater Treatment 66.606 BEIF23-48/00 7,885,314 - 52,091 - 52,091Colonia Water & Waste Water Treatment 66.606 G13500/13600 24,020,000 7,571 370,108 214,204 163,475American Recovery and Reinvestment Act

SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS CITY OF LAREDO, TEXASPERIOD ENDED SEPTEMBER 30, 2011Total - Texas Department of State Health Services 6,169,100 309,313 1,575,089 1,344,658 539,744Commission on Law Enforcement Officers Standards and EducationLaw Enforcement Officer Standards and Education N/A N/A 32,844 (20,316) 38,529 30,089 (11,876)Law Enforcement Officer Standards and Education 2007 N/A N/A 1,600 (122) 122 - -Law Enforcement Officer Standards and Education 2008 N/A N/A 1,600 (1,462) 1,462 - -Law Enforcement Officer Standards and Education 2009 N/A N/A 1,324 (1,324) 1,324 - -Law Enforcement Officer Standards and Education 2010 N/A N/A 1,249 (53) 16 - (37)Law Enforcement Officer Standards and Education 2011 N/A N/A 1,600 - - 1,566 (1,566)Total - Commission on Law Enforcement Officers Standards and Education 40,217 (23,277) 41,453 31,655 (13,479)Texas Parks and Wildlife:Laredo Independence Hills Park ** N/A 50-000405 499,981 - 501,200 463,748 37,452Total - Texas Parks and Wildlife 499,981 - 501,200 463,748 37,452Texas State Library and Archives CommissionSeven Flags Regional Advisory Council N/A N/A 14,000 - 5,276 - 5,276Texas State Library and Archives Commission N/A N/A 5,110 - 800 800 -Loan Star Libraries Grant N/A 442-44653 35,265 - 34,928 35,265 (337)Total-Texas State Library and Archives Commission $ 54,375 - 41,004 36,065 4,939(Continued)GRANT NAMEPass Accrued AccruedFederal Through (Deferred) (Deferred)CFDA Grantor's Program or Revenue at Revenue Revenue atFederal Grantor / Pass Through Grantor / Program Title Number Number Award Amount September 30, 2010 Recognized Receipts September 30, 2011306STATE AWARDSTexas Department of State Health Services:Primary Health Care Program 09-10 N/A 2010-031863-001 $ 134,342 14,126 - 14,126 -Primary Health Care Program 10-11 N/A 2011-036689-001 140,236 8,737 158,043 128,578 38,202Primary Health Care Program 11-12 N/A 2012-039405-001 100,000 - 9,608 - 9,608Tuberculosis Prevention and Control 07-08 N/A 2008-023216-001 140,125 107 - - 107Tuberculosis Prevention and Control 09-10 N/A 2010-032854-001 187,752 24,053 - 24,053 -Tuberculosis Prevention and Control 10-11 N/A 2011-035291-001 199,863 12,193 175,314 173,360 14,147Tuberculosis Prevention and Control 11-12 N/A 2012-039041-001 170,859 - 15,067 - 15,067Bureau of Clinical and Nutrition Services - Population-BasedPublic Health - Title V - CORE - 04 N/A 74-60015732-0407 21,657 353 - - 353Bureau of Clinical and Nutrition Services - Prenatal, Preventive &Primary Child Health, Genetics and Dental Serv. - 07 N/A 2007-02435-001 347,956 800 - - 800Bureau of Clinical and Nutrition Services - Prenatal, Preventive &Primary Child Health, Genetics and Dental Serv. - 10 N/A 2010-031683-001 - 1,222 - 1,222 -Bureau of Clinical and Nutrition Services - Prenatal, Preventive &Primary Child Health, Genetics and Dental Serv. - 11 N/A 2011-036931-001 87,640 4,969 69,624 74,593 -Bureau of Clinical and Nutrition Services - Prenatal, Preventive &Primary Child Health, Genetics and Dental Serv. - 12 N/A 2012-039350-001 75,000 - 7,300 - 7,300Family Planning - 02 N/A 74-60015732B02-01 93,550 11,595 - - 11,595Family Planning - 04 N/A 74-60015732A04-03 101,751 32,017 - - 32,017Family Planning - 07 N/A 2007-02365-002 61,068 28,685 - - 28,685Family Planning - 08 N/A 2008-024154-001 34,883 20,638 - - 20,638Family Planning - 09 N/A 2009-029220-001 56,671 339 - - 339Family Planning - 10 N/A 2010-032523-001 9,445 9,382 - - 9,382Family Planning - 10 N/A 2010-034124-001 60,000 26,679 - - 26,679Family Planning - 11 N/A 2011-036931-001 87,640 9,282 98,843 96,839 11,286Family Planning - 12 N/A 2012-039819-001 6,566 - 6,300 - 6,300Child Health Services Prenatal - 09 N/A 2009-029486-001 90,811 1,757 - - 1,757Child Health Services Prenatal - 10 N/A 2009-031713-001 92,000 1,815 - 1,815 -Child Health Services Prenatal - 11 N/A 2011-036661-001 46,000 2,273 28,585 30,858 -Child Health Services Prenatal - 12 N/A 2012-039646-001 41,000 - 2,462 - 2,462Local City CVD & Stroke Prevention Plan N/A 2010-034654-001 30,000 8,547 - 8,547 -Local City CVD & Stroke Prevention Plan N/A 2011-035575-001 30,000 3,064 26,863 29,927 -Cancer Prevention & Research Institute of Texas (CPRIT) ** N/A PP100228 2,497,500 5,107 649,885 378,588 276,404Public Health Emergency Response N/A 2010-033283-001 829,566 76,350 179,202 248,814 6,738Border Binational Health Week N/A 1X408TXUSMEXBRD 2,100 - 600 600 -Office of Border Health - Border Health N/A 2012-039746-001 40,000 - 2,266 - 2,266Passed Through South Texas Development Council:H. I. V. Social Services 09-10 N/A 19-2-09 (10) 135,807 - 6,984 6,984 -H. I. V. Social Services 10-11 N/A 19-2-10 (11) 136,022 5,223 129,875 125,754 9,344H. I. V. Social Services 11-12 N/A 19-2-10 (12) 81,290 - 8,268 - 8,268

SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS CITY OF LAREDO, TEXASPERIOD ENDED SEPTEMBER 30, 2011State Department of Transportation:Auto Theft Task Force N/A SA-T01-10057-10 $ 458,405 65,897 - 65,897 -Auto Theft Task Force N/A SA-T01-10057-11 426,720 37,328 389,392 383,340 43,380Auto Theft Task Force N/A SA-T01-10057-12 433,514 - 38,718 - 38,718TXDOT-Transit Scholarship N/A N/A - - 191 191 -TXDOT-IH 35 Maintenance Agreement N/A N/A 300,000 - 12,811 - 12,811TXDOT-Interlocal Agreement for TPDES Permit Program N/A N/A 44,000 3,667 44,000 25,667 22,000TXDOT -Laredo Signal Integration Project ** N/A CSJ-0922-33-094 1,750,000 9,881 884,300 552,316 341,865TXDOT -Federal Inspection Booths at World Trade Bridge N/A CSJ-0922-33-114 3,731,774 1,062,567 1,065,389 1,963,777 164,179TX Dept. of Transportation-Routine Airport Maintenance Program '11 N/A CSJ-M122LREDO 50,000 - 47,286 36,432 10,854TX. Dept of Transportation- Chacon Creek Hike and Bike Trail ** N/A CSJ-0922-33-100 3,300,000 11,316 415,773 383,449 43,640TX. Dept of Transportation- West Laredo CPL Road N/A CSJ-0922-33-071 4,797,810 - - - -TX. Dept of Transportation- West Laredo CPL Road Phase II N/A CSJ-0922-33-076 2,597,272 - 214,385 191,916 22,469TX. Dept of Transportation- West Laredo CPL Road Phase III N/A CSJ-0922-33-093 11,301,589 - - - -Total - State Department of Transportation 29,191,084 1,190,656 3,112,245 3,602,985 699,916Texas Commission on Environmental QualityPassed Through STDC:T.C.E.Q.-Regional Solid Waste Management N/A 08-19-g02/04 40,000 - - - -Total - Texas Commission on Evironmental Quality 40,000 - - - -Texas Water Development BoardWater Rights Grant-Economic Distressed Areas N/A PROJECT #10409 7,500,000 14,608 5,101,836 5,101,709 14,735OTHER ASSISTANCECo-Operator and Chauffeurs FundingLaredo Gang Initiative N/A CO-11-A10-24297-01 200,000 - 184,589 173,572 11,0172009 Stone Garden Grant N/A NA 700,000 - 266,098 155,171 110,9272010 Stone Garden Grant N/A NA 700,000 - - - -Tobacco Compliance FY 10/11 N/A N/A 8,200 - 4,422 4,422 -Tobacco Compliance FY 11/12 N/A N/A 3,500 - 1,272 3,500 (2,228)Local Border Security FY 10/11 N/A LBSP-10/11 300,000 - 250,405 150,000 100,405United States Customs Service 04 N/A N/A 116,580 243 - - 243Custom-Narcotics 2003 N/A N/A 91,000 2,561 - - 2,561Custom-Narcotics 2007 N/A N/A 91,000 3,095 - - 3,095Custom-Narcotics 2010 N/A N/A 91,000 3,108 - 3,108 -Custom-Narcotics 2011 N/A N/A 91,000 - 36,608 29,404 7,204Custom-Narcotics 2012 N/A N/A 91,000 - 644 - 644OCEDETF-DEA 2011 N/A N/A 17,202 - 9,563 8,921 642OCEDETF-FBI 2011 N/A N/A 20,000 - 7,040 - 7,040Laredo Joint Terrorism TF 2010 N/A N/A 15,573 2,426 - 2,426 -Laredo Joint Terrorism TF 2011 N/A N/A 17,202 - 16,704 15,271 1,433Safe Streets Task Force 2010 N/A N/A 33,807 8,053 - 8,053 -Safe Streets Task Force 2011 N/A N/A 34,404 - 29,328 24,982 4,346Fugitive Apprehension Task Force 10 N/A N/A 99,000 18,392 - 18,392 -Fugitive Apprehension Task Force 11 N/A N/A 99,000 - 21,861 17,864 3,997Bureau of Alcohol and Tobacco 08 N/A N/A 21,000 232 - - 232Bureau of Alcohol and Tobacco 09 N/A N/A 21,000 4,457 - 4,457 -Bureau of Alcohol and Tobacco 10 N/A N/A 28,500 4,660 - 4,660 -Bureau of Alcohol and Tobacco 11 N/A N/A 22,449 - 24,959 19,074 5,885Webb County - Auto Theft Task Force 10/11 N/A N/A 43,000 - 39,417 39,417 -Webb County - Auto Theft Task Force 11/12 N/A N/A 43,000 - 3,583 3,583 -Dept. of Public Safety-Travel Reimbursement N/A N/A $ - - 64 64 -GRANT NAMEPass Accrued AccruedFederal Through (Deferred) (Deferred)CFDA Grantor's Program or Revenue at Revenue Revenue atFederal Grantor / Pass Through Grantor / Program Title Number Number Award Amount September 30, 2010 Recognized Receipts September 30, 2011307Total - Texas Water Development Board 7,500,000 14,608 5,101,836 5,101,709 14,735Total State Assistance 43,494,757 1,491,300 10,372,827 10,580,820 1,283,307

SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS CITY OF LAREDO, TEXASPERIOD ENDED SEPTEMBER 30, 2011Total Federal, State and Other Assistance $ 294,038,527 17,791,666 85,687,534 91,308,124 12,171,076GRANT NAMEPass Accrued AccruedFederal Through (Deferred) (Deferred)CFDA Grantor's Program or Revenue at Revenue Revenue atFederal Grantor / Pass Through Grantor / Program Title Number Number Award Amount September 30, 2010 Recognized Receipts September 30, 2011308OTHER ASSISTANCEDepartment of Information Resources N/A N/A $ - - 5,702 5,702 -911 Regional Communications Grant - FY2009 N/A N/A 1,603,374 269,329 - 269,329 -911 Regional Communications Grant - FY2010 N/A N/A 1,357,921 (53,944) 2,956 (50,988) -911 Regional Communications Grant - FY2011 N/A N/A 1,937,479 (275,234) 1,028,206 772,888 (19,916)911 Regional Communications Grant - FY2012 N/A N/A 1,226,600 - 23,133 - 23,133UTHCSA - Proyecto Bienestar 10-11 N/A N/A 90,000 - 3,009 3,009 -UTHCSA - South Texas AIDS Network N/A N/A 25,000 3,400 19,950 23,350 -UTHCSA - South Texas AIDS Network N/A N/A 25,000 - 3,769 - 3,769UTHCSA - Dental Clinic Construction (deferred) N/A N/A 1,300,000 (459,474) 459,474 - -UTHCSA - Dental Clinic Operations N/A N/A 300,000 12,296 - 12,296 -UTHCSA - Dental Clinic Operations N/A N/A 300,000 5,353 137,343 142,696 -UTHCSA - Dental Clinic Operations N/A N/A 125,000 - 2,994 - 2,994Laredo Community College-Interlocal Agreement for TPDES Permit Prgrm. N/A N/A 10,000 - 10,000 5,000 5,000Webb County-Interlocal Agreeement-Health N/A N/A 200,000 - 210,000 210,000 -Mercy Hospital - CHIP Perinate N/A N/A - 114,191 75,502 (58,472) 248,165SCAN - HIV Testing N/A N/A 33,882 5,697 - 5,697 -SCAN - HIV Testing N/A N/A 45,000 135 39,677 35,264 4,548Webb County-311 Agreement N/A N/A 34,500 - 34,500 34,500 -Webb County - Father McNaboe Splash Park N/A N/A 275,000 - - - -Webb County - Father McNaboe Park & Noon Lions Parks N/A N/A 100,000 - - - -Universal Service Fund (USF)-E-Rate Program (Round 12) N/A N/A 411,137 - 240,532 240,532 -Universal Service Fund (USF)-E-Rate Program (Round 13) N/A N/A 367,394 - 56,370 56,370 -911 Regional Communications Grant - FY2011 Use of Revenue N/A N/A - - 929,213 929,213 -Mexican Consulate - Ventanilla de Salud Program N/A N/A 28,180 (13,512) 33,272 30,000 (10,240)BECC - Tex-Mex Binational Solid Waste Reduction N/A TAA09-046 40,000 8,735 20,542 29,277 -BECC - Colonias Household Hazardouz Waste Collection N/A TAA11-008 45,000 - - - -City of Nuevo Laredo-Water Weir Project N/A N/A 50,000 44,012 - - 44,012Total - Other Assistance 12,928,884 (291,789) 4,232,701 3,382,004 558,908NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS* Major Federal Program** Major State ProgramNOTE A - BASIS OF PRESENTATIONThe accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Laredo is presentedon the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMBCircular A-133, Audits of States, Local Governments, and Non-Profit Organizations. therefore some amounts presented in thisschedule may differ from amounts presented in, or used in the presentation of the basic financial statements.

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